composed disturbance

[miloud]

dear sirs
The disturbance is composed of two influences: Vit are random
variables assumed to be iid N(0, σ
v2) and independent of Uit, which are non-negative random variables
assumed to account for the cost of inefficiency in production. The
later are assumed to be independently distributed as truncations at
zero of the N(mit, σU2) distribution; where mit = zitδ is a (p×1)
vector of variables Z which influence the efficiency of a firm; and δ
is an (1×p) vector of parameters to be estimated.
The error term is decomposed using the conditional distribution
approach proposed by Jondrow et
al. (1982) for a truncated normal distribution; providing an unbiased,
though inconsistent, estimate
of the cost of inefficiency. The measure of cost inefficiency relative
to the cost frontier is defined
as: E[U|ε] = [σλ/(1+λ2)][φ(μ*/σ)/Φ(μ*/σ) + μ*/σ] (3)
where σ = σV2 + σU2, λ = σU2/(σV2+ σU2), μ* = ελ/σ + μ/(σλ), φ is the
standard normal density
function, and Φ the cumulative normal density function, and all other
terms are as previously
defined.
THE QUESTION IS HOW CAN WE DECOMPOSE E IF WE WANT TO DO IT MANUALLY ?
I CAN DO IT USING FRONTIER 4.1 BUT I WANT UNDERSTAND HOW CAN IT BE
DONE
THANKS