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Efficiency measures for retail fertilizer dealers

Author

Listed:
  • Paul V. Preckel

    (1145 Krannert Building, Department of Agriculture Economics, Purdue University, West Lafayette, IN 47907)

  • Jay T. Akridge

    (1145 Krannert Building, Department of Agriculture Economics, Purdue University, West Lafayette, IN 47907)

  • Michael A. Boland

    (Department of Agriculture Economics, Kansas State University)

Abstract

An application of tests of economically rational behavior by fertilizer retailers is presented. Tests are developed to measure efficiency of variable cost minimization, revenue maximization, and profit maximization. These tests include standard linear programming-based nonparametric efficiency tests and simpler but less conclusive tests which are performed using only simple arithmetic. Results indicate that fertilizer retailers act as variable cost minimizers, but not as revenue and profit maximizers. Additional tests isolate whether inefficiency in cost minimization is due to a perception of variable input fixity. Management can then take steps to focus efforts on input control. © 1997 John Wiley & Sons, Inc.

Suggested Citation

  • Paul V. Preckel & Jay T. Akridge & Michael A. Boland, 1997. "Efficiency measures for retail fertilizer dealers," Agribusiness, John Wiley & Sons, Ltd., vol. 13(5), pages 497-509.
    • Handle: RePEc:wly:agribz:v:13:y:1997:i:5:p:497-509
    DOI: 10.1002/(SICI)1520-6297(199709/10)13:5<497::AID-AGR4>3.0.CO;2-1
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    References listed on IDEAS

    as
    1. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-598, October.
    2. Raymond J. Kopp, 1981. "The Measurement of Productive Efficiency: A Reconsideration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(3), pages 477-503.
    3. Forsund, Finn R. & Lovell, C. A. Knox & Schmidt, Peter, 1980. "A survey of frontier production functions and of their relationship to efficiency measurement," Journal of Econometrics, Elsevier, vol. 13(1), pages 5-25, May.
    4. Jay T. Akridge, 1989. "Measuring Productive Efficiency in Multiple Product Agribusiness Firms: A Dual Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 116-125.
    5. Schmidt, Peter, 1976. "On the Statistical Estimation of Parametric Frontier Production Functions," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 238-239, May.
    6. Kopp, Raymond J. & Diewert, W. Erwin, 1982. "The decomposition of frontier cost function deviations into measures of technical and allocative efficiency," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 319-331, August.
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    Cited by:

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    2. Keith O. Fuglie, 2008. "Is a slowdown in agricultural productivity growth contributing to the rise in commodity prices?," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 431-441, November.
    3. Asif Reza Anik & Sanzidur Rahman & Jaba Rani Sarker, 2020. "Five Decades of Productivity and Efficiency Changes in World Agriculture (1969–2013)," Agriculture, MDPI, vol. 10(6), pages 1-20, June.
    4. Perez, Romain, 2006. "Are the Economic Partnership Agreements a first-best optimum for the ACP countries?," Conference papers 331463, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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