This paper analyses the rate of technical progress in the Portuguese hotel industry between 1998 and 2002, using a stochastic cost frontier method. A translog frontier model is used and the maximum likelihood estimation technique is employed to estimate the empirical model. We estimate the efficiency scores and disentangle the rate of technical progress into three components: pure technical progress, non-neutral technical progress and scale-augmenting technical progress. The results show relatively low efficiency scores, denoting a high degree of waste in the use of resources, despite the fact that technical change contributes to a reduction of costs.
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