Land fragmentation, market integration and farm efficiency: empirical evidence from Kosovo

Johannes Sauer, Sophia Davidova and Matthew Gorton

No 134968, 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK from Agricultural Economics Society

Abstract: This paper investigates the effect of land fragmentation on farm efficiency in Kosovo utilising agricultural household survey data. To recognise heterogeneity among agricultural production systems in Kosovo, we estimate the technology separately for different groups or “classes” of farms, identified using latent class modelling. This approach separates the data into multiple technological “classes” according to estimated probabilities of class membership based on multiple specified characteristics, relating in this case to land fragmentation and market integration. The latent class frontier method is linked to the estimation of a multi-output multi-input production function, namely a directional output distance function, and to the estimation of Morishima elasticities of substitution, based on shadow price changes indicating allocative efficiency changes. The analytical results confirm that the usual approach of using one homogenous function to estimate fragmentation effects is misleading and can lead to inappropriate policy recommendations. Three distinct classes of farm households are identified, which show different levels of efficiency and the proxies for land fragmentation and market integration show different signs over these classes.

Keywords: Farm; Management (search for similar items in EconPapers)
Pages: 23
Date: 2012-04
New Economics Papers: this item is included in nep-agr, nep-eff and nep-tra
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Land Fragmentation, Market Integration and Farm Efficiency: Empirical Evidence from Kosovo (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aesc12:134968

DOI: 10.22004/ag.econ.134968

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