Stochastic Frontier meets Breakdown Frontier

Abstract: This paper studies sensitivity analysis of Stochastic Frontier Models. We elaborate relaxations of the baseline assumptions in the Stochastic Frontier Models and characterize the identified set under this relaxations. Furthermore, we derive the breakdown frontier for a relevant parameter of interest, the average inefficiency of a production unit. We show an application of the procedures on a well known dataset, and make the code available for the interested practitioner.