In previous studies, measures of technical inefficiency derived from stochastic production frontiers have been estimated from residuals which are sensitive to specification errors. This study corrects for this inaccuracy by extending the doubly heteroscedastic stochastic cost frontier suggested by Hadri (1999) to stochastic production frontier and to panel data. The extended correction for heteroscedasticity is supported by the data. The study uses data on 102 mainly cereal farms in England, and not only estimates technical efficiency but also examines the links between the efficiency of cereal production, cereal area, chemical usage and labour usage. These links are explored because European Union agricultural policy is no longer narrowly concerned solely with farm income levels and productivity, but also embraces environmental quality and rural development concerns. Whenever there are multiple policy goals it is important to gain an understanding of whether there is conflict or complementarity between them.
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Paper provided by University of Exeter, School of Business and Economics in its series Discussion Papers with number
99/08.
Length: 21 pages Date of creation: 1998 Date of revision: Handle: RePEc:fth:exetec:99/08
Contact details of provider: Postal: School of Business and Economics University of Exeter Streatham Court Rennes Drive Exeter EX4 4PU Phone: (01392) 263218 Fax: (01392) 263242 Web page: http://www.exeter.ac.uk/sobe/ More information through EDIRC
Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity 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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