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The empirical identification of heterogeneous technologies and technical change

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  • Johannes Sauer
  • Catherine J. Morrison Paul

Abstract

When different technologies are present in an industry, we assume that a homogeneous technology will lead to misleading implications about technical change and inefficient policy recommendations. In this article a latent class modelling approach and flexible estimation of the production structure is used to distinguish different technologies for a representative sample of EU dairy producers, as an industry exhibiting significant structural changes and differences in production systems in the past decades. The model uses a transformation function to recognize multiple outputs; separate technological classes based on multiple characteristics, a flexible generalized linear functional form, a variety of inputs and random effects to capture firm heterogeneity; and measures of first- and second-order elasticities to represent technical change and biases. We find that if multiple production frontiers are embodied in the data, different firms exhibit different output or input intensities and changes associated with different production systems that are veiled by overall (average) measures. In particular, we find that farms that are larger and more capital intensive experience greater productivity, technical progress and labour savings, and enjoy scale economies that have increased over time.

Suggested Citation

  • Johannes Sauer & Catherine J. Morrison Paul, 2013. "The empirical identification of heterogeneous technologies and technical change," Applied Economics, Taylor & Francis Journals, vol. 45(11), pages 1461-1479, April.
  • Handle: RePEc:taf:applec:45:y:2013:i:11:p:1461-1479
    DOI: 10.1080/00036846.2011.617704
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    File URL: http://hdl.handle.net/10.1080/00036846.2011.617704
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    References listed on IDEAS

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    1. Boris E. Bravo-Ureta, 1986. "Technical Efficiency Measures for Dairy Farms Based on a Probabilistic Frontler Function Model," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 34(3), pages 399-415, November.
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    Cited by:

    1. Alvarez, Antonio & del Corral, Julio & Tauer, Loren W., 2012. "Modeling Unobserved Heterogeneity in New York Dairy Farms: One-Stage versus Two-Stage Models," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 41(3), December.
    2. Mohamed Chaffai & Patrick Plane, 2017. "Firm Productivity, Technology and Export Status, What Can We Learn from Egyptian Industries?," Working Papers 1134, Economic Research Forum, revised 09 Jun 2017.
    3. Nehring, Richard & Sauer, Johannes & Gillespie, Jeffrey & Hallahan, Charlie, 2016. "United States and European Union Dairy Farms: Where Is the Competitive Edge?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 19(B).
    4. Alvarez, Antonio & del Corral, Julio & Tauer, Loren W., 2012. "Modeling Unobserved Heterogeneity in New York Dairy Farms: One-Stage versus Two-Stage Models," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 41(3), December.
    5. Lajos Barath & Heinrich Hockmann, 2016. "Technological differences, theoretically consistent frontiers and technical efficiency: a Random parameter application in the Hungarian crop producing farms," IEHAS Discussion Papers 1636, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    6. Billé, AG & Salvioni, C. & Benedetti, R., 2015. "Spatial Heterogeneity In Production Functions Models," 150th Seminar, October 22-23, 2015, Edinburgh, Scotland 212662, European Association of Agricultural Economists.
    7. Benjamin, Emmanuel Olatunbosun & Sauer, Johannes, 2016. "Cost efficiency of smallholder payment for ecosystem services (PES) scheme in rural Kenya," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244865, German Association of Agricultural Economists (GEWISOLA).
    8. Fertő, Imre & Baráth, Lajos, 2013. "Heterogenitás és technikai hatékonyság - a magyar specializált szántóföldi növénytermesztő üzemek esete
      [Heterogeneity and technical efficiency - the case of Hungarys specialized arable crop produc
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 650-669.

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