Munich Personal RePEc Archive

Handling losses in translog profit models

Bos, J.W.B. and Koetter, M. (2006): Handling losses in translog profit models.

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Abstract

In this paper, we compare standard approaches used to handle losses in logarithmic stochastic profit frontier models with a simple novel approach. We discuss discriminatory power, rank stability and precision of profit efficiency scores. Our new method enhances rank stability and discriminatory power, and improves the precision of profit efficiency scores.

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