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Input usage, output mix and industry deregulation: an analysis of the Australian dairy manufacturing industry

  • Kelvin Balcombe
  • Hristos Doucouliagos
  • Iain Fraser

In this paper we estimate a Translog output distance function for a balanced panel of state level data for the Australian dairy processing sector. We estimate a fixed effects specification employing Bayesian methods, with and without the imposition of monotonicity and curvature restrictions. Our results indicate that Tasmania and Victoria are the most technically efficient states with New South Wales being the least efficient. The imposition of theoretical restrictions marginally affects the results especially with respect to estimates of technical change and industry deregulation. Importantly, our bias estimates show changes in both input use and output mix that result from deregulation. Specifically, we find that deregulation has positively biased the production of butter, cheese and powders. Copyright 2007 The Authors Journal Compilation 2007 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishers Ltd .

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Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 51 (2007)
Issue (Month): 2 (06)
Pages: 137-156

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Handle: RePEc:bla:ajarec:v:51:y:2007:i:2:p:137-156
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