Stochastic frontier production analysis: Measuring performance of public telecommunications in 24 OECD countries

This study presents a new use of least absolute value (LAV) estimation for obtaining parameter estimates of a stochastic frontier production function. The LAV estimation is combined with data envelopment analysis (DEA) and the resulting DEA/LAV estimates are examined by several statistical tests. As an important application, this study applies DEA/LAV stochastic frontier production analysis for measuring and predicting the performance of public telecommunications in 24 OECD (Organization for Economic Cooperation and Development) countries. This international comparison may serve as an empirical basis for understanding the telecommunications industries whose environments are now shifting from regulation to competition.