More specifically, the distribution of ε j is restricted by the condition ε j≥1−α −X jβ in Eq. (6). Following Simar and Wilson [32] and [33], this study modifies Eq. (6). The true but unobserved efficiency score, OEj, in Eq. (6) is replaced by its estimate , and the distribution is assumed to be truncated normal with zero mean (before truncation), unknown variance, and a truncation point, which are determined by different conditions. Accordingly, we estimate the following:
equation(7)