Farms' Technical Inefficiencies in the Presence of Government Programs

Teresa Serra, David Zilberman () and Jose M. Gil

No 9952, 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: We focus on determining the impacts of government programs on farms’ technical inefficiency levels. We use Kumbhakar’s (2002) stochastic frontier model that accounts for both production risks and risk preferences. Our theoretical framework shows that decoupled government transfers are likely to increase (decrease) DARA (IARA) farmers’ production inefficiencies if variable inputs are risk decreasing. However, the impacts of decoupled payments cannot be anticipated if variable inputs are risk increasing. We use farm-level data collected in Kansas to illustrate the model.

Keywords: Farm Management (search for similar items in EconPapers)
Date: 2007

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