Estimate Allocative Efficiency using IZEF in Stata

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Experience Level: Entry
I have price data on a particular sector. I need to estimate allocative efficiency using the IZEF method with a translog cost function, but am struggling to incorporate the factor of proportionality in my commands (my command is -nlsur-). I can share the papers I am trying to replicate but I really only need a little guidance on this one command to add the inefficiency parameters to it.

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  • Nikola T.

    Can you share paper you are replicating, the code you have so far, and first few rows of data set?

    Ayesha I.23 Dec 2020

    I cannot share the data outside my institution, but it is simply output, total cost and input prices of a few firms. The paper I am following is "Input allocation efficiency in the United States railroad industry:
    Changing work rules and managerial flexibility" by Azrina Abdullah Al-Hadia, John Bitzanb, James Peoples

    My code has the nlsur command followed by its standard syntax for, in my case, the translog cost function. I just don't know how to add the distortion parameter/allocative efficiency paramter ('g' in the paper) to it.