[Limdep Nlogit List] Stochastic Cost Frontier

[Kalyan Chakraborty]

Dear Limdep Users:
I am estimating a stochastic cost frontier with 5-year balanced panel data for 283 obs to measure cost inefficiency. I have listed my data as limdep manual page E8-19 and used command listed on page E24-25 for exponential and half-normal. All variables are in natural log form.
 
The model commend is below:
***********************************************

FRONTIER; LHS=LEXP; RHS= ONE,LM4,LM7,LM10,LR5,LR8,LR11,LEXPR,LMAPH,LTSAL,LPSAL,LDIS,LPOV,LENROL,EFFI
        ; PDS=5; COST; MODEL=E; LIST; EFF=U$
KERNAL; RHS=U; Title=Exponential Inefficiencies$
 
***********************************************
Part of the final result looks like this:
 

Normal exit from iterations. Exit status=0.
 
+---------------------------------------------+
| Limited Dependent Variable Model - FRONTIER |
| Maximum Likelihood Estimates                |
| Model estimated: Feb 14, 2006 at 11:05:30AM.|
| Dependent variable                 LEXP     |
| Weighting variable                 None     |
| Number of observations             1415     |
| Iterations completed                 25     |
| Log likelihood function        1405.157     |
| Exponential frontier model                  |
| Variances: Sigma-squared(v)=       .00489   |
|            Sigma-squared(u)=       .01869   |
| Stochastic Cost Frontier, e=v+u.            |
+---------------------------------------------+
+---------+--------------+----------------+--------+---------+----------+
|Variable | Coefficient  | Standard Error |b/St.Er.|P[|
Kalyan (Kal) Chakraborty, Ph.D
Assistant Professor (Economics)
http://www.emporia.edu/~chakrabk/
Department of Accounting and CIS
School of Business
Emporia State University
1200 Commercial Street, Box 4057
Emporia, KS 66801
(Tel) 620-341-5913
(Fax) 620-341-6346
e-mail: chakrabk at emporia.eduZ|>z] | Mean of X|
+---------+--------------+----------------+--------+---------+----------+
          Primary Index Equation for Model
 Constant     -1.18780663      .40526150    -2.931   .0034
 LM4            .09126320      .01789793     5.099   .0000    4.10569054
 LM7            .08737959      .02038531     4.286   .0000    3.99637758
 LM10           .09386199      .02504438     3.748   .0002    3.88890829
 LR5            .28800419      .06677744     4.313   .0000    4.41913384
 LR8            .29846452      .08100430     3.685   .0002    4.41666053
 LR11           .08185095      .06815921     1.201   .2298    4.38597258
 LEXPR         -.02724296      .02139238    -1.273   .2028    4.13395305
 LMAPH         -.03646426      .00705845    -5.166   .0000    3.48903165
 LTSAL          .50853113      .02878906    17.664   .0000    10.5853638
 LPSAL          .10934193      .00690076    15.845   .0000    11.0469784
 LDIS           .04022829      .00530372     7.585   .0000    2.61474023
 LPOV           .11053656      .01126124     9.816   .0000    3.49102925
 LENROL        -.10669593      .00637851   -16.727   .0000    6.61845206
 EFFI           .00139684      .02091182      .067   .9467     .77203251
          Variance parameters for compound error
 Theta         7.31384244      .65845827    11.108   .0000
 Sigmav         .06989843      .00085516    81.737   .0000
 
 
Data listing for stochastic frontier model
Observ Pd. Data row  Observed Y     Fitted Y      Y - Xb      E[u|e]
     1   1        1      8.8737       8.9001      -.0263       .0329
     1   2        2      8.9342       8.9368      -.0026       .0329
     1   3        3      9.0575       8.9729       .0846       .0329
     1   4        4      9.1385       9.0395       .0991       .0329
     1   5        5      9.1420       9.0217       .1202       .0329
     2   1        6      8.9096       8.9465      -.0369       .0401
     2   2        7      8.9257       8.9752      -.0495       .0401
     2   3        8      9.0108       8.9943       .0165       .0401
     2   4        9      9.0878       9.0429       .0449       .0401
     2   5       10      9.1906       9.0746       .1160       .0401
 
 
How do I interpret the inefficiency component?
Any help is appreciated.
Thank you.
Kal

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