Why do rice farmers in Taiwan not expand scale? Economies of scale and the estimation of short- and long-run cost efficiencies using stochastic frontier analysis with time-varying panel data model
In this study, stochastic frontier analysis with a time-varying panel data model was applied to analyse short- and long-run cost functions; the short- and long-run cost efficiencies of rice farms in Taiwan from 1980 to 2008 were measured by treating five size classifications in 15 counties in the form of 75 cohorts. The results reveal the presence of economies of scale and artificial inefficiency in these farms. Further, an analysis of the short- and long-run efficiencies of all the cohorts by area, size and year dummy variables indicates that even the areas where agriculture is well developed and topographic conditions are suitable have better long-run cost efficiencies, and large-scale farmland have lower long-run but higher short-run efficiencies. Due to the inefficient use of farmland in the long run, farmers do not have the incentive to expand production scale; they are unable to enjoy the economies of scale, which shows minimum cost. Finally, a random-effect estimation of panel analysis confirms that improvement in the infrastructure development of farmland and the functioning of the rental market of farmland contributes towards increasing both short- and long-run cost efficiencies.
Volume (Year): 31 (2011)
Issue (Month): 3 ()
|Contact details of provider:|| |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Almas Heshmati & Subal C. Kumbhakar, 1997. "Estimation Of Technical Efficiency In Swedish Crop Farms: A Pseudo Panel Data Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1-3), pages 22-37.
- Fujiki, Hiroshi, 1999. "The Structure of Rice Production in Japan and Taiwan," Economic Development and Cultural Change, University of Chicago Press, vol. 47(2), pages 387-400, January.
- Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
- Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990.
"Production frontiers with cross-sectional and time-series variation in efficiency levels,"
Journal of Econometrics,
Elsevier, vol. 46(1-2), pages 185-200.
- Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1989. "Production Frontiers With Cross-Sectinal And Time-Series Variation In Efficiency Levels," Working Papers 89-18, C.V. Starr Center for Applied Economics, New York University.
When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-10-00704. 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: (John P. Conley)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.