Stochastic Frontier Analysis: A Review and Synthesis

Abstract

This chapter intends to define Stochastic Frontier Models (SFA) and their applications for Eco-Efficiency (EE) assessment within environmental and economic fields. We start by presenting the methodology of efficiency assessment, discussing its advantages and disadvantages as compared to the more traditional Data Envelopment Analysis (DEA). A literature review of its applications within the field is to be provided and future research avenues are to be identified. Results allow us to favor the SFA methodology to detriment the DEA for its easiness of application when assessing EE and establishing rankings or even inferring about its determinants.