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Explaining Differences in Milk Quota Values: The Role of Economic Efficiency

Listed author(s):
  • Antonio Alvarez
  • Carlos Arias
  • Luis Orea

This article explores the relationship between milk quota values and economic efficiency in order to analyze government interventions in quota allocations among producers. For this purpose, we estimate quota values using a panel of Spanish dairy farms. Quota values are then decomposed into economic efficiency, price, and scale effects in order to assess the relative influence of these factors. We find that efficiency is important in explaining quota values but is uncorrelated with observable farm characteristics. This casts doubts on the government's ability to allocate quotas to efficient farms. Copyright 2006, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/j.1467-8276.2006.00846.x
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Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 88 (2006)
Issue (Month): 1 ()
Pages: 182-193

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Handle: RePEc:oup:ajagec:v:88:y:2006:i:1:p:182-193
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  1. Lilyan E. Fulginiti & Richard K. Perrin, 1992. "Theory and Measurement of Producer Response under Quotas, The," Center for Agricultural and Rural Development (CARD) Publications 92-wp94, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Alston, Julian M., 1981. "A Note on the Effects of Non-Transferable Quotas on Supply Functions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 49(03), December.
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  7. Boots, Maroeska & Oude Lansink, Alfons & Peerlings, Jack, 1997. "Efficiency Loss Due to Distortions in Dutch Milk Quota Trade," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 24(1), pages 31-46.
  8. Giancarlo Moschini, 1984. "Quota Values and Price Uncertainty," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 32(1), pages 231-234, March.
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  12. Luis Orea & Subal C. Kumbhakar, 2004. "Efficiency measurement using a latent class stochastic frontier model," Empirical Economics, Springer, vol. 29(1), pages 169-183, January.
  13. Fulginiti, Lilyan & Perrin, Richard, 1993. "The Theory and Measurement of Producer Response under Quotas," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 97-106, February.
  14. Hung-jen Wang & Peter Schmidt, 2002. "One-Step and Two-Step Estimation of the Effects of Exogenous Variables on Technical Efficiency Levels," Journal of Productivity Analysis, Springer, vol. 18(2), pages 129-144, September.
  15. Lansink, Alfons Oude, 2003. "Technical efficiency and CO2 abatement policies in the Dutch glasshouse industry," Agricultural Economics, Blackwell, vol. 28(2), pages 99-108, March.
  16. Helming, John & Oskam, Arie & Thijssen, Geert, 1993. "A Micro-economic Analysis of Dairy Farming in the Netherlands," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 20(3), pages 343-363.
  17. Hervé Guyomard & Xavier Delache & Xavier Irz & Louis-Pascal Mane, 1996. "A Microeconometric Analysis Of Milk Quota Transfer: Application To French Producers," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 206-223.
  18. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
  19. Oskam, A. J. & Speijers, D. P., 1992. "Quota mobility and quota values : Influence on the structural development of dairy farming," Food Policy, Elsevier, vol. 17(1), pages 41-52, February.
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