ON THE CONSISTENCY OF MAXIMUM-LIKELIHOOD-ESTIMATION OF MONOTONE AND CONCAVE PRODUCTION FRONTIERS

Banker and Maindiratta (1992) provides a method for the estimation of a stochastic production frontier from the class of all monotone and co ncave functions. A key aspect of their procedure is that the arguments in the log-likelihood function are the fitted frontier outputs themse lves rather than the parameters of some assumed parametric functional form. Estimation from the desired class of functions is ensured by con straining the fitted points to lie on some monotone and concave surfac e via a set of inequality restrictions. In this paper, we establish th at this procedure yields consistent estimates of the fitted outputs an d the composed error density function parameters.