[Part 5] 6/53 Stochastic FrontierModels Heterogeneity Shifting the Outcome Function Firm specific heterogeneity can also be incorporated into the inefficiency model as follows: This modifies the mean of the truncated normal distribution y i =  x i + v i - u i v i ~ N[0,  v 2 ] u i = |U i | where U i ~ N[  i,  u 2 ],  i =  0 +  1 z i,
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