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Disproportionate joint cost allocation at individual-farm level using maximum entropy

Markus Lips

No 182851, 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia from European Association of Agricultural Economists

Abstract: This paper addresses the allocation of joint cost among enterprises – also called ‘production branches’ or ‘activities’ – and presents an approach based on maximum entropy and standard costs from farm-management literature as allocation factors. The approach allows us to discard the widely applied assumption of a proportional joint cost allocation. Since it provides a disproportionate joint cost allocation, the distinctive feature of the approach is that it favours the adjustment of large standard costs rather than of small ones.

Keywords: Productivity Analysis; Research Methods/ Statistical Methods (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff
Date: 2014-08
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae14:182851

DOI: 10.22004/ag.econ.182851

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