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Efficiency and regulation: a comparison of dairy farms in Ontario and New York State

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  • Peter Slade
  • Getu Hailu

Abstract

We study the cost efficiency of dairy farms operating under two different regulatory regimes. While neo-classical economic theory suggests that farms should maximize their efficiency regardless of their regulatory system, we find that farms operating in a more regulated environment have, on average, a lower cost efficiency. Differences in cost efficiency are primarily explained by allocative decisions—farms in the more regulated environment are overcapitalized and overly reliant on homegrown feed. Efficiency is estimated using bootstrapped data envelopment analysis and a stochastic distance function. We discuss the implications of these results for welfare and policy. Copyright Springer Science+Business Media New York 2016

Suggested Citation

  • Peter Slade & Getu Hailu, 2016. "Efficiency and regulation: a comparison of dairy farms in Ontario and New York State," Journal of Productivity Analysis, Springer, vol. 45(1), pages 103-115, February.
    • Handle: RePEc:kap:jproda:v:45:y:2016:i:1:p:103-115
    DOI: 10.1007/s11123-015-0456-9
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    Citations

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    Cited by:

    1. Richard J Vyn & James Rude, 2020. "The Influence of Supply Management on Farmland Values in Ontario," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(4), pages 815-834, December.
    2. Eugene Beaulieu & V. Balaji Venkatachalam, 2018. "NAFTA Renegotiations: An Opportunity for Canadian Dairy?," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 11(10), March.
    3. Worden, David & Hailu, Getu, 2020. "Do genomic innovations enable an economic and environmental win-win in dairy production?," Agricultural Systems, Elsevier, vol. 181(C).
    4. Getu Hailu, 2023. "Reflections on technological progress in the agri‐food industry: Past, present, and future," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 71(1), pages 119-141, March.

    More about this item

    Keywords

    Regulation; Efficiency; Agricultural policy; Data envelopment analysis; Bootstrap; Distance function; L51; D21; Q18;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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