We focus on determining the impacts of government programs on farms technical inefficiency levels. We use KumbhakarÂs (2002) stochastic frontier model that accounts for both production risks and risk preferences. Our theoretical framework shows that decoupled government transfers are likely to increase (decrease) DARA (IARA) farmers production inefficiencies if variable inputs are risk decreasing. However, the impacts of decoupled payments cannot be anticipated if variable inputs are risk increasing. We use farm-level data collected in Kansas to illustrate the model.
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Length: Date of creation: 2007 Date of revision: Handle: RePEc:ags:aaea07:9952
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