ABSTRACT
This chapter sets up a framework for measuring productive efficiency and establishes the frontier production function model as the basic analytical tool for underlying the empirical research. To do so requires an in-depth analysis and review of the model, and the basic concepts related to production functions and economic efficiency. Following this, the range of econometric or parametric frontier models that operationalise the conceptual model (such as the deterministic and stochastic frontier models) are analysed and several estimation techniques applicable to the frontier model are examined. Finally, this will be followed by the empirical application of a production function relevant for the port industry.
