Multi-input Multi-output Farm-level Cost Function: A Comparison of Least Squares and Entropy Estimators
AbstractWe introduce a modification of the quadratic-Leontieff multi-output cost function that is particularly suitable for the data of the Farm Accountancy Data Network. We present least squares and entropy estimates of that function and compare their results for a sample of crop farms. Our results are encouraging for the use of entropy estimators in cases in which farms are not assumed to share the same technology. Our approach can be seen as an extension of the Positive Mathematical Programming approach (Howitt, 1995). The extension consists in an explicit specification of inputs in the cost function and in the possibility of modeling several farms simultaneously.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24727.
Date of creation: 2005
Date of revision:
cost function; least squares estimator; entropy estimator; heterogeneity; Farm Management; C3; D61; Q12;
Find related papers by JEL classification:
- C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
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- Thomas Heckelei & Hendrik Wolff, 2003. "Estimation of constrained optimisation models for agricultural supply analysis based on generalised maximum entropy," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(1), pages 27-50, March.
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- Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers 1488, Iowa State University, Department of Economics.
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