Distinguishing Different Industry Technologies and Localized Technical Change
AbstractWhen different technologies are present in an industry, assuming a homogeneous technology will lead to misleading implications about technical change and inefficient policy recommendations. In this paper a latent class modelling approach and flexible estimation of the production structure 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 model uses a transformation function to recognize multiple outputs; separate technological classes based on multiple characteristics, a flexible generalized linear functional form, a variety of inputs, and random effects to capture firm heterogeneity; and measures of first- and second-order elasticities to represent technical change and biases. We find that if multiple production frontiers are embodied in the data, different firms exhibit different output or input intensities and changes associated with different production systems that are veiled by overall (average) measures. In particular, we find that farms that are larger and more capital intensive experience greater productivity, technical progress and labor savings, and enjoy scale economies that have increased over time.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 122nd Seminar, February 17-18, 2011, Ancona, Italy with number 99834.
Date of creation: 10 Feb 2011
Date of revision:
Heterogenous Technologies; Transformation Function; Localized Technical Change; Agricultural and Food Policy; Q12; O33; C35;
Other versions of this item:
- 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.
- Morrison Paul, Catherine J. & Sauer, Johannes, 2010. "Distinguishing Different Industry Technologies and Localized Technical Change," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91749, Agricultural Economics Society.
- 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-2011-03-05 (Agricultural Economics)
- NEP-ALL-2011-03-05 (All new papers)
- NEP-EFF-2011-03-05 (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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