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Estimating the Technology Coefficients in Linear Programming Models

Author

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  • Bruce L. Dixon
  • Robert H. Hornbaker

Abstract

Estimation of a linear programming model's technology coefficients using data from a sample of firms is viewed as an application of random coefficient regression (RCR). An RCR estimator restricting predicted coefficient values to be nonnegative is proposed. The estimator's finite sample performance is examined in Monte Carlo experiments. The proposed estimator performs well compared with inequality-restricted least squares, despite its use of an estimated covariance matrix. In sampling a population of firms, a dependency may arise between coefficients and activity levels. Two tests for dependence are proposed and examined in Monte Carlo experiments. The tests' reliability varies with characteristics of the sampled population.

Suggested Citation

  • Bruce L. Dixon & Robert H. Hornbaker, 1992. "Estimating the Technology Coefficients in Linear Programming Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(4), pages 1029-1039.
  • Handle: RePEc:oup:ajagec:v:74:y:1992:i:4:p:1029-1039.
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    File URL: http://hdl.handle.net/10.2307/1243201
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    Cited by:

    1. Yves Léony & Ludo Peeters & Maurice Quinqu & Yves Surry, 1999. "The Use of Maximum Entropy to Estimate Input‐Output Coefficients From Regional Farm Accounting Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 425-439, September.
    2. Gocht, Alexander, 2008. "Estimating input allocation for farm supply models," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6469, European Association of Agricultural Economists.

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