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Multiple-output production with undesirable output: An application to nitrogen surplus in agriculture

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Abstract

Many production processes yield both good outputs and undesirable ones (e.g. pollutants). In this paper, we develop a generalization of a stochastic frontier model which is appropriate for such technologies. We discuss efficiency analysis and, in particular, define technical and environmental efficiency in the context of our model. Methods for carrying out Bayesian inference are developed and applied to a panel data set of Dutch dairy farms.

Suggested Citation

  • Carmen Fernandez & Mark F J Steel & Gary Koop, 2002. "Multiple-output production with undesirable output: An application to nitrogen surplus in agriculture," Edinburgh School of Economics Discussion Paper Series 34, Edinburgh School of Economics, University of Edinburgh.
  • Handle: RePEc:edn:esedps:34
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    File URL: http://www.econ.ed.ac.uk/papers/id34_esedps.pdf
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    Keywords

    dairy farms; efficiency; environment; longitudinal data; Markov chain Monte Carlo;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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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