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Farm heterogeneity and technical efficiency: Some results from Swedish dairy farms

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Abstract

This paper introduces farm-heterogeneity in measuring technical efficiency of Swedish dairy farms using farm-level data. In calculating technical efficiency which is allowed to vary over time and across farms, we control for farm-specific effects. This is possible only when panel data is available. Furthermore, we separate technical efficiency from technical change—the presence of which is indicated by a shift in the production function over time,ceteris paribus. We also calculate percentage change in technical efficiency to examine whether farm efficiencies have improved over time. Finally, a comparison of technical efficiency, elasticities of different inputs, and technical change is made across different years and panels. The data includes four panels of dairy farms observed during the period 1976–1988, excluding 1985.

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Authors and Affiliations

  1. Department of Economics, University of Gothenburg, Viktoriagatan 30, S-411 25, Gothenburg, Sweden

    Almas Heshmati

  2. Department of Economics, University of Texas at Austin, 78712-1172, Austin, TX, USA

    Subal C. Kumbhakar

Authors
  1. Almas Heshmati
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  2. Subal C. Kumbhakar
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Additional information

We thank two anonymous referees, Anders Klevmarken and Lennart Hjalmarsson for valuable comments. Financial support from SJFR, the Gothenburg Economic School Foundation, Jan Wallender and Tore Browaldh Research Foundations is gratefully acknowledged.

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Heshmati, A., Kumbhakar, S.C. Farm heterogeneity and technical efficiency: Some results from Swedish dairy farms. J Prod Anal 5, 45–61 (1994). https://doi.org/10.1007/BF01073597

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