Specification and estimation of stochastic multiple-output production and technical inefficiency

This paper presents a primal-based approach for specification and estimatio n of multiple-output production frontiers that allows simultaneous identifi cation and estimation of determinants of technical inefficiency. The propos ed model extends the technical efficiency effects model by Battese and Coel li (1995) to general multiple- output technologies. An empirical applicatio n using Swedish health care panel data from the years 1989-1994 is included . The key issue is to test for the effects on technical efficiency of an or ganizational reform implemented with the primary purpose to increase effici ency. The results reveal no significant effect on technical efficiency of t he reform, but evidence of overall decreased technical efficiency and techn ical progress in the provision of health care over the studied time period are found.