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Switching toward capital-intensive technologies in Finnish dairy farms

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  • Kyösti Pietola
  • Anna-Maija Heikkilä

Abstract

We analyze dairy farmers' decisions to switch from the traditional labor-intensive tied-housing system to a more capital-intensive free-stall housing. The choice of the housing system is modeled as a sequence of interrelated choices. Errors that are consistent with the observed choices are simulated and used to control for serial correlation and farm-specific fixed effects. The sequence of choices is estimated by the GHK simulation technique and simulated maximum likelihood (SML). The results suggest that the switch toward more capital-intensive free-stall housing responds positively and elastically to investment grants and a farmer's capital resources. In addition, positive revenue shocks significantly encourage switches to free-stall housing. Copyright 2005 International Association of Agricultural Economics.

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Bibliographic Info

Article provided by International Association of Agricultural Economists in its journal Agricultural Economics.

Volume (Year): 33 (2005)
Issue (Month): s3 (November)
Pages: 381-387

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Handle: RePEc:bla:agecon:v:33:y:2005:i:s3:p:381-387

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