Volume 1, No. 2, August 2002

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Technology Gap, Efficiency, and a Stochastic Metafrontier Function
George E. Battese
University of New England, Australia
D. S. Prasada Rao
University of New England, Australia
Abstract
This paper considers a stochastic metafrontier function to investigate the technical efficiencies of firms in different groups that may not have the same technology. A decomposition of output is presented involving the technology gap and technical efficiency ratios for firms in a group relative to the best practice in the industry.
Key words: efficiencies; stochastic metafrontier; technology gap
JEL classification: C5; D24

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