Measuring and Explaining Farm Inefficiency in a Panel Data Set of Mixed Farms

Posted: 18 Oct 2000

See all articles by Jaume Puig-Junoy

Jaume Puig-Junoy

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Josep M. Argilés

Universitat Pompeu Fabra

Abstract

This paper aims to estimate a translog stochastic frontier production function in the analysis of a panel of 150 mixed Catalan farms in the period 1989-1993, in order to attempt to measure and explain variation in technical inefficiency scores with a one-stage approach. The model uses gross value added as the output aggregate measure. Total employment, fixed capital, current assets, specific costs and overhead costs are introduced into the model as inputs. Stochastic frontier estimates are compared with those obtained using a linear programming method using a two-stage approach. The specification of the translog stochastic frontier model appears as an appropriate representation of the data, technical change was rejected and the technical inefficiency effects were statistically significant. The mean technical efficiency in the period analyzed was estimated to be 64.0%. Farm inefficiency levels were found significantly at 5% level and positively correlated with the number of economic size units.

Keywords: Technical efficiency, stochastic frontier approach, agricultural economics, frontier productions, farm efficiency

JEL Classification: C23

Suggested Citation

Puig-Junoy, Jaume and Argilés Bosch, Josep Maria, Measuring and Explaining Farm Inefficiency in a Panel Data Set of Mixed Farms. Available at SSRN: https://ssrn.com/abstract=246618

Jaume Puig-Junoy

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

Josep Maria Argilés Bosch (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
+34-93 542 24 05 (Phone)
+34-93 542 17 46 (Fax)

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