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The role of technical efficiency in takeovers: Evidence from the French cheese industry, 1985-2000

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  • Jad Chaaban

    (University of Toulouse (INRA), Université des Sciences Sociales, Manufacture des Tabacs, Aile Jean-jacques Laffont, 21 Allée de Brienne, 31 000 Toulouse, France)

  • Vincent Réquillart

    (University of Toulouse (INRA, IDEI), Université des Sciences Sociales, Manufacture des Tabacs, Aile Jean-jacques Laffont, 21 Allée de Brienne, 31 000 Toulouse, France)

  • Audrey Trévisiol

    (University of Toulouse (INRA), Unité ESR, BP 52627, 31 326 Castanet Tolosan Cedex, France)

Abstract

The paper aims to identify whether production characteristics, such as technical efficiency and returns to scale, affect takeovers. Applying a two-stage procedure on original panel data on French cheese manufacturers, the paper first estimates firm-specific productive efficiency and scale economies using data envelopment analysis. The paper then uses the findings of the first stage to evaluate a random effects logit model of the determinants of takeover in the French cheese industry for the period 1985-2000. The paper finds that technical efficiency is not a significant determinant of takeovers, whereas the nature of scale economies is. Firms with decreasing returns to scale (i.e., an oversized production capacity) face a higher risk of takeover. This suggests that cheese manufacturers have been seeking to expand their milk processing capacities by acquiring large firms. This proves to be an indirect consequence of the non-transferable milk quota regime affecting the scarce milk input commodity. [EconLit citations: D24, L25, Q13]. © 2005 Wiley Periodicals, Inc. Agribusiness 21: 545-564, 2005.

Suggested Citation

  • Jad Chaaban & Vincent Réquillart & Audrey Trévisiol, 2005. "The role of technical efficiency in takeovers: Evidence from the French cheese industry, 1985-2000," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 545-564.
    • Handle: RePEc:wly:agribz:v:21:y:2005:i:4:p:545-564
    DOI: 10.1002/agr.20064
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    References listed on IDEAS

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    Cited by:

    1. Magdalena Kapelko, 2017. "Dynamic versus static inefficiency assessment of the Polish meat‐processing industry in the aftermath of the European Union integration and financial crisis," Agribusiness, John Wiley & Sons, Ltd., vol. 33(4), pages 505-521, September.
    2. Magdalena Kapelko & Alfons Oude Lansink, 2020. "Dynamic Cost Inefficiency of the European Union Meat Processing Firms," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 760-777, September.
    3. Alexandre Gohin & Fabienne Féménia, 2009. "Estimating Price Elasticities of Food Trade Functions: How Relevant is the CES‐based Gravity Approach?," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 253-272, June.
    4. Amar Oukil & Slim Zekri, 2021. "Investigating farming efficiency through a two stage analytical approach: Application to the agricultural sector in Northern Oman," Papers 2104.10943, arXiv.org.

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