This study considers measurement of technical efficiency of 250 public and privately owned textile companies in Iran.Two stochastic frontier production functions are used for this purpose.One assumes that firm characteristics directly influence the degree of technical inefficiency while the other assumes that the technology plays a key role.Maximum likelihood method is used to estimate parameters of the models and predict technical efficiency for each enterprise.The results obtained when using these two models are compared.The sensitivity of efficiency measures with respect to different model specifications is also analyzed.Empirical results show that most of the enterprises are operating at high level of efficiencies.The overall mean efficiency is 86%,indicating that,on average,there is a potential for an increase of output by 14%.The result also shows that the public firms are operating more inefficiently than the private ones.
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