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Efficiency and regulation: a comparison of dairy farms in Ontario and New York State

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  • Peter Slade

    () (University of Saskatchewan)

  • Getu Hailu

    () (University of Guelph)

Abstract

Abstract We study the cost efficiency of dairy farms operating under two different regulatory regimes. While neo-classical economic theory suggests that farms should maximize their efficiency regardless of their regulatory system, we find that farms operating in a more regulated environment have, on average, a lower cost efficiency. Differences in cost efficiency are primarily explained by allocative decisions—farms in the more regulated environment are overcapitalized and overly reliant on homegrown feed. Efficiency is estimated using bootstrapped data envelopment analysis and a stochastic distance function. We discuss the implications of these results for welfare and policy.

Suggested Citation

  • Peter Slade & Getu Hailu, 2016. "Efficiency and regulation: a comparison of dairy farms in Ontario and New York State," Journal of Productivity Analysis, Springer, vol. 45(1), pages 103-115, February.
  • Handle: RePEc:kap:jproda:v:45:y:2016:i:1:d:10.1007_s11123-015-0456-9
    DOI: 10.1007/s11123-015-0456-9
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    More about this item

    Keywords

    Regulation; Efficiency; Agricultural policy; Data envelopment analysis; Bootstrap; Distance function;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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