Input- and Output-Oriented Technical Efficiency of Ukrainian Collective Farms, 1989-1992: Bayesian Analysis of a Stochastic Production Frontier Model

We propose estimation of a stochastic production frontier model within a Bayesian framework to obtain the posterior distribution of single-input-oriented technical efficiency at the firm level. All computations are carried out using Markov chain Monte Carlo methods. The approach is illustrated by applying it to production data obtained from a survey of Ukrainian collective farms. We show that looking at the changes in single-input-oriented technical efficiency in addition to the changes in output-oriented technical efficiency improves the understanding of the dynamics of technical efficiency over the first years of transition in the former Soviet Union.