IDEAS home Printed from https://ideas.repec.org/a/ags/earnsa/28760.html
   My bibliography  Save this article

Scale, productivity growth and risk response under uncertainty

Author

Listed:
  • Hranaiova, Jana
  • Stefanou, Spiro E.

Abstract

SUMMARY - This study focuses on the analysis of the production behavior and risk preferences in the presence of output price uncertainty. Following a theoretical model based on the assumption of maximization of expected utility of profits, the approach used in this study infers information about risk preferences from the production characteristics of the farm. In addition, the nonparametric method of estimating elasticity of scale and technical change eliminates the need to impose a uniform production or cost functions on individual producers. The approach is applied to a panel of dairy farms, which are evaluated for their elasticity of scale and the total productivity growth components of their operations. Estimates of farmers' risk attitudes represented by individual marginal risk premiums are also related to socio-economic attributes of farmers. Overall, farm size plays an important role in explaining productivity and scale differences and has the most significant negative effect on marginal risk aversion. The magnitude of the impact of additions to the farm's dairy herd increases with scale of operations. RESUMEN - El objetivo de este trabajo es el análisis del comportamiento de la producción y en las preferencias ante el riesgo en condiciones de incertidumbre en el precio de salida. Siguiendo un modelo teórico basado en la asunción de maximización de utilidad de los beneficios, el enfoque empleado en este trabajo permite obtener información relativa a las preferencias ante el riesgo a partir de las características de la explotación. Además, el método no-paramétrico de estimación de la elasticidad de la escala y del cambio técnico elimina la necesidad de imponer una producción uniforme o funciones de precio sobre productores particulares. Este enfoque se aplica a un panel de explotaciones lecheras, que son evaluadas en función de los componentes relativos a su elasticidad de escala y al incremento total de la productividad de sus operaciones. Las estimaciones en torno a las actitudes de los productores ante el riesgo representadas por primas individuales por riesgos marginales están igualmente relacionadas con a los atributos socioeconómicos de los productores. En conjunto, el tamaño de la explotación es importante para explicar las diferencias en productividad y escala, y produce el efecto negativo más significativo sobre la aversión al riesgo marginal. La magnitud del impacto de nuevas incorporaciones de cabezas de ganado a los rebaños en explotaciones lecheras aumenta con la escala de las operaciones.

Suggested Citation

  • Hranaiova, Jana & Stefanou, Spiro E., 2002. "Scale, productivity growth and risk response under uncertainty," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 2(02), pages 1-19.
    • Handle: RePEc:ags:earnsa:28760
    DOI: 10.22004/ag.econ.28760
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/28760/files/02020073.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.28760?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ford, Beth Pride & Musser, Wesley N. & Yonkers, Robert D., 1993. "Measuring Historical Risk In Quarterly Milk Prices," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 22(1), pages 1-7, April.
    2. Paul R. Flacco & Douglas M. Larson, 1992. "Nonparametric Measures of Scale and Technical Change for Competitive Firms under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(1), pages 173-176.
    3. Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
    4. Chambers, Robert G, 1983. "Scale and Productivity Measurement under Risk," American Economic Review, American Economic Association, vol. 73(4), pages 802-805, September.
    5. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Flacco, Paul R. & Larson, Douglas M., 1990. "Measuring Scale and Technical Change from Observable Data Under Uncertainty," 1990 Annual meeting, August 5-8, Vancouver, Canada 271065, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Jean-Philippe Boussemart & Walter Briec & Christophe Tavera, 2011. "More evidence on technological catching-up in the manufacturing sector," Applied Economics, Taylor & Francis Journals, vol. 43(18), pages 2321-2330.
    3. Rasmussen, Svend, 2003. "Criteria for optimal production under uncertainty. The state-contingent approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 1-30.
    4. Wall, Charles A. & Fisher, Brian S., 1988. "Supply Response and the Theory of Production and Profit Functions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 56(03), pages 1-22, December.
    5. Pan, Shihua, 1990. "The microfoundations of mixed system of planning and markets: some theoretical considerations and an empirical analysis of the Chinese agriculture," ISU General Staff Papers 1990010108000010876, Iowa State University, Department of Economics.
    6. Subal Kumbhakar & Efthymios Tsionas, 2010. "Estimation of production risk and risk preference function: a nonparametric approach," Annals of Operations Research, Springer, vol. 176(1), pages 369-378, April.
    7. Jaouad, Mohamed, 1994. "An agricultural policy and trade model for Morocco," ISU General Staff Papers 1994010108000011483, Iowa State University, Department of Economics.
    8. Blancard, Stephane & Boussemart, Jean-Philippe & Crainich, D. & Leleu, Herve, 2008. "How can allocative inefficiency reveal risk preference? An empirical investigation on French wheat farms," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44208, European Association of Agricultural Economists.
    9. Abdullahi Abdulkadri & Michael Langemeier & Allen Featherstone, 2006. "Estimating economies of scope and scale under price risk and risk aversion," Applied Economics, Taylor & Francis Journals, vol. 38(2), pages 191-201.
    10. Tomasz Gerard Czekaj & Arne Henningsen, 2013. "Panel Data Nonparametric Estimation of Production Risk and Risk Preferences: An Application to Polish Dairy Farms," IFRO Working Paper 2013/6, University of Copenhagen, Department of Food and Resource Economics.
    11. Boussemart, Jean-Philippe & Crainich, David & Leleu, Hervé, 2015. "A decomposition of profit loss under output price uncertainty," European Journal of Operational Research, Elsevier, vol. 243(3), pages 1016-1027.
    12. Jean-Philippe Boussemart & David Crainich & Hervé Leleu, 2012. "A decomposition of profit inefficiency into price expectation error, preferences towards risk and technical inefficiency," Working Papers 2012-ECO-04, IESEG School of Management.
    13. Aradhyula, Satheesh Venkata, 1989. "Policy structure, output supply and input demand for US crops," ISU General Staff Papers 198901010800009909, Iowa State University, Department of Economics.
    14. Alfons Oude Lansink, 1999. "Area Allocation Under Price Uncertainty on Dutch Arable Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(1), pages 93-105, January.
    15. Gilligan, Daniel O., 1998. "Farm Size, Productivity, And Economic Efficiency: Accounting For Differences In Efficiency Of Farms By Size In Honduras," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20918, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Thomas Eichner & Andreas Wagener, 2002. "Increases in Risk and the Welfare State," CESifo Working Paper Series 685, CESifo.
    17. Karagiannis, Giannis & Katranidis, Stelios D. & Velentzas, Kostas, 1996. "Decomposition Analysis Of Factor Cost Shares: The Case Of Greek Agriculture," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 28(2), pages 1-11, December.
    18. Pope, Rulon D. & Just, Richard E., 1995. "Cost Function Estimation Under Risk," Working Papers 197825, University of Maryland, Department of Agricultural and Resource Economics.
    19. Moreno, Rosina & Lopez-Bazo, Enrique & Artis, Manuel, 2002. "Evaluating the optimality of Spanish industry (1980-1993)," ERSA conference papers ersa02p353, European Regional Science Association.
    20. Raushan Bokusheva & Lukáš Čechura & Subal C. Kumbhakar, 2023. "Estimating persistent and transient technical efficiency and their determinants in the presence of heterogeneity and endogeneity," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(2), pages 450-472, June.

    More about this item

    Keywords

    Productivity Analysis;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:earnsa:28760. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aeeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.