We explore the asset pricing implications of an investment-based model that features a stochastic technology frontier and costly technology adoption. Firms adopt the latest technology embodied in new capital to reach a stochastic technology frontier, but this decision entails an adoption cost. The model predicts that old capital firms are more risky and hence offer a higher returns than young c...

A common feature distinguishing between parametric/ statistical models and engineering economics models is that engineering models explicitly represent best practice technologies, whereas parametric/statistical models are typically based on average practice. Measures of energy intensity based on average practice are of little use in corporate management of energy use or for public policy goal s...

This paper provides simulation evidence concerning some statistical properties of two different approaches to technical efficiency estimation for multipleoutput production under noisy conditions: The Ray Frontier Approach (RFA) from Löthgren (1997) and DEA+ proposed in Gstach (1996). RFA, unlike earlier approaches in the realm of stochastic frontier analysis, is capable of efficiency estimation...

In this study, we use Stochastic Frontier analysis approach to estimate cost efficiency, economies of scale, and technological progress among Iranian banks from 1999 to 2012. The results show that there is a marked difference in cost efficiency before and after the recent financial sanctions against Iranian banking industry. Moreover, the results indicate that specialized government-owned banks...

This paper investigates the relationship between the concept of activity (including both professional and nonprofessional) and cognitive functioning among older European individuals. In this research, we used data collected during the first wave of SHARE (Survey on Health, Ageing and Retirement in Europe), and a measurement approach known as stochastic frontier analysis, derived from the econom...

This paper examines relative performance of electricity distribution systems in the UK and Japan between 1985 and 1998 using costbased benchmarking with data envelopment analysis (DEA) and stochastic frontier analysis (SFA) methods. The results suggest that the productivity gain in the UK electricity distribution has been larger than in the Japanese sector. In particular, productivity growth ac...

The most commonly used approaches to parametric (stochastic frontier) analysis of efficiency in panel data, notably the fixed and random effects models, fail to distinguish between cross individual heterogeneity and inefficiency. This blending of effects is particularly problematic in the World Health Organization's (WHO) panel data set on health care delivery, which is a 191 country, 5-year pa...