Distinguishing Different Industry Technologies and Localized Technical Change
AbstractThis contribution is based on the notion that different technologies are present in an industry. These different technologies result in differential “drivers” of economic performance depending on the kind of technology used by the individual firm. In a first step different technologies are empirically distinguished. Subsequently, the associated production patterns are approximated and the respective change over time is estimated. A latent class modelling approach is used to distinguish different technologies for a representative sample of E.U. dairy producers as an industry exhibiting significant structural changes and differences in production systems in the past decades. The production technology is modelled and evaluated by using the flexible functional form of a transformation function and measures of first- and second-order elasticities. We find that overall (average) measures do not well reflect individual firms’ production patterns if the technology of an industry is heterogeneous. If there is more than one type of production frontier embodied in the data, it should be recognized that different firms may exhibit very different output or input intensities and changes associated with different production systems. In particular, in the context of localized technical change, firms with different technologies can be expected to show different technical change patterns, both in terms of overall magnitudes and associated relative output and input mix changes. Assuming a homogenous technology would result in inefficient policy recommendations leading to suboptimal industry outcomes.
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Bibliographic InfoPaper provided by Agricultural Economics Society in its series 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland with number 91749.
Date of creation: 29 Mar 2010
Date of revision:
Heterogenous Technologies; Transformation Function; Localized Technical Change; Production Economics; Q12; O33; C35;
Other versions of this item:
- Sauer, Johannes & Morrison Paul, Catherine J., 2011. "Distinguishing Different Industry Technologies and Localized Technical Change," 122nd Seminar, February 17-18, 2011, Ancona, Italy 99834, European Association of Agricultural Economists.
- Morrison Paul, Catherine J. & Sauer, Johannes, 2010. "Distinguishing Different Industry Technologies and Localized Technical Change," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61146, Agricultural and Applied Economics Association.
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
This paper has been announced in the following NEP Reports:
- NEP-AGR-2010-07-17 (Agricultural Economics)
- NEP-ALL-2010-07-17 (All new papers)
- NEP-EFF-2010-07-17 (Efficiency & Productivity)
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- Latruffe, Laure & Sauer, Johannes, 2010.
"Subsidies, Production Structure and Technical Change: A Cross-Country Comparison,"
2010 Annual Meeting, July 25-27, 2010, Denver, Colorado
61148, Agricultural and Applied Economics Association.
- Key, Nigel D. & Latruffe, Laure & Sauer, Johannes, 2010. "Subsidies, production structure and technical change – A cross-country comparison," 114th Seminar, April 15-16, 2010, Berlin, Germany 61109, European Association of Agricultural Economists.
- Nehring, Richard F. & Sauer, Johannes & Gillespie, Jeffrey M. & Hallahan, Charles B., 2011. "Intensive versus Extensive Dairy Production Systems: Dairy States in the Eastern and Midwestern U.S. and Key Pasture Countries the E.U.: Determining the Competitive Edge," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 98824, Southern Agricultural Economics Association.
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