Production of Tea in Assam and West Bengal: Technical Inefficiency Effects

Abstract

A stochastic frontier production function is defined for panel data on firms in which the non-negative technical inefficiency effects are assumed to be a function of firm-specific variables. The inefficiency effects are assumed to be independently distributed as truncations of normal distributions with constant variance, but with means which are a linear function of observable variables. An empirical application of the model is obtained using up to ten years of data on tea gardens of Assam and West Bengal.