Inter-firm and intra-firm efficiency measures

Intra-firm efficiency involves computing a particular firm's efficiency degree over time relative to the firm-specific production frontier. Inter-firm efficiency reveals a particular firm's performance over time relative to the "best practice frontier" among the set of comparable firms. These efficiency measures are related by an inter-firm catch-up component reflecting differences in technology across firms. Those measures are estimated for Dutch pot-plant firms using the Generalized Maximum Entropy formalism. The empirical results suggest the inter-firm catch-up component is the major determinant of inter-firm efficiency.