IDEAS home Printed from https://ideas.repec.org/a/ags/jlaare/31089.html
   My bibliography  Save this article

Estimating A Profit Function In The Presence Of Inefficiency: An Application To Russian Agriculture

Author

Listed:
  • Arnade, Carlos Anthony
  • Trueblood, Michael A.

Abstract

The relationship among cost functions, distance functions, and technical inefficiency are utilized to show how technical inefficiency scores can be incorporated into the specification of a profit function and a related system of output supply and input demands. A method also is introduced for incorporating allocative efficiency scores into the same system. The theoretical and empirical approach requires fewer assumptions than those made in many studies. An illustrative example is provided for Russian agriculture for 1194-95, a period when significant technical and allocative inefficiency was known to exist. The results demonstrate inefficiency limits the supply response to prices, thus leading to lower estimates of output response compare to a traditional supply model in which efficiency is assumed.

Suggested Citation

  • Arnade, Carlos Anthony & Trueblood, Michael A., 2002. "Estimating A Profit Function In The Presence Of Inefficiency: An Application To Russian Agriculture," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(01), July.
  • Handle: RePEc:ags:jlaare:31089
    as

    Download full text from publisher

    File URL: http://purl.umn.edu/31089
    Download Restriction: no

    References listed on IDEAS

    as
    1. Jonasson, Lars & Apland, Jeffrey, 1997. "Frontier Technology and Inefficiencies in Programming Sector Models: An Application to Swedish Agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 24(1), pages 109-131.
    2. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
    3. Battese, George E., 1992. "Frontier production functions and technical efficiency: a survey of empirical applications in agricultural economics," Agricultural Economics, Blackwell, vol. 7(3-4), pages 185-208, October.
    4. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, April.
    5. Subal C. Kumbhakar, 2001. "Estimation of Profit Functions When Profit Is Not Maximum," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 1-19.
    6. Sedik, David & Trueblood, Michael & Arnade, Carlos, 1999. "Corporate Farm Performance in Russia, 1991-1995: An Efficiency Analysis," Journal of Comparative Economics, Elsevier, vol. 27(3), pages 514-533, September.
    7. Sotnikov, Sergey, 1998. "Evaluating the Effects of Price and Trade Liberalisation on the Technical Efficiency of Agricultural Production in a Transition Economy: The Case of Russia," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(3), pages 412-431.
    8. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    9. Davidson, Russell & MacKinnon, James G., 1983. "Testing the specification of multivariate models in the presence of alternative hypotheses," Journal of Econometrics, Elsevier, vol. 23(3), pages 301-313, December.
    10. Carlos Arnade & Munisamy Gopinath, 2000. "Financial constraints and output targets in Russian agricultural production," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(1), pages 71-84.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mukherjee, Vivekananda & Das, Abhishek & Akhand, Anirban & Gupta, Gautam, 2013. "Toxicity and profitability of rice cultivation under wastewater irrigation: the case of the East Calcutta Wetlands," Ecological Economics, Elsevier, vol. 93(C), pages 292-300.
    2. Speelman, Stijn & Buysse, Jeroen & Farolfi, Stefano & Frija, Aymen & D'Haese, Marijke & D'Haese, Luc, 2009. "Estimating the impacts of water pricing on smallholder irrigators in North West Province, South Africa," Agricultural Water Management, Elsevier, vol. 96(11), pages 1560-1566, November.

    More about this item

    Keywords

    Agribusiness;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:jlaare:31089. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/waeaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.