EconPapers    
Economics at your fingertips  
 

Are farms in less favored areas less efficient?

Lajos Baráth, Imre Fertő and Štefan Bojnec
Authors registered in the RePEc Author Service: Imre Fertő ()

Agricultural Economics, 2018, vol. 49, issue 1, 3-12

Abstract: This article investigates farm technical efficiency (TE) and the effect of heterogeneity on production among farms using the Slovenian Farm Accountancy Data Network sample of farms in the period 2007–2013. We model production technology with a random parameter model that allows us to examine both the direct effect of heterogeneity on production and the indirect effect through the interaction of unobserved heterogeneity with time and input variables. Additionally, we consider intersectoral heterogeneity among types of farming. Results confirm the importance of all these sources of heterogeneity. The second contribution of the article is that, in addition to using conventional statistical methods, we examine the differences between less favored area (LFA) and non†LFA farms using matching techniques. Results indicate that there is only a minor and statistically nonsignificant difference in TE between these groups. However, the difference is highly significant in terms of heterogeneity and technology. In other words, results show that farms in LFAs are not more inefficient but rather use different, production–environment†specific technologies. These findings call attention to the fact that omitting the effect of heterogeneity on production technology leads to biased TE estimates and, in turn, leads to potentially imperfect policy choices.

Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/agec.12391

Related works:
Working Paper: Are Farms in Less Favoured Areas Less Efficient? (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:agecon:v:49:y:2018:i:1:p:3-12

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0169-5150

Access Statistics for this article

Agricultural Economics is currently edited by W.A. Masters and G.E. Shively

More articles in Agricultural Economics from International Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2019-10-03
Handle: RePEc:bla:agecon:v:49:y:2018:i:1:p:3-12