Quota Deregulation and Organic versus Conventional Milk – A Bayesian Distance Function Approach
Milk quota trading rules differ across EU member countries. In Denmark a biannual milk quota exchange was set up in 1997 to promote a more efficient reallocation of milk quotas as well as to reduce transaction costs related to the searching and matching of sellers and buyers. Using two comprehensive panel data sets on organic and conventional milk farms this study attempts to disentangle the effects of the introduction of an increased quota transferability on the production structure of those farms as well as the probability of market entry and exit. Bayesian estimation techniques are used to estimate an input oriented generalized Leontief distance function as well as a curvature constrained specification. The results suggest that the deregulation in the quota allocation mechanism led to an increased efficiency with respect to organic as well as conventional milk production. A relative shift of the PPF in favor of the production of organic milk has been found. In the post deregulation period the probability of farms entering organic milk production from conventional milk production has been significantly increased and the probability of farms exiting organic milk production to produce other non-organic output has been significantly decreased.
|Date of creation:||30 Mar 2008|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.aes.ac.uk|
More information through EDIRC
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.:
- Johannes Sauer & Klaus Frohberg, 2007. "Allocative efficiency of rural water supply – a globally flexible SGM cost frontier," Journal of Productivity Analysis, Springer, vol. 27(1), pages 31-40, February.
- Rasmussen, Svend & Neilsen, A Hjortshoj, 1985. "The Impact of Quotas on the Optimal Adjustment of Milk Production at the Farm Level," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 12(4), pages 351-64.
- Shawna Grosskopf & Kathy J. Hayes & Lori L. Taylor & William L. Weber, 1997. "Budget-Constrained Frontier Measures Of Fiscal Equality And Efficiency In Schooling," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 116-124, February.
- Diewert, W. E., 1973. "Functional forms for profit and transformation functions," Journal of Economic Theory, Elsevier, vol. 6(3), pages 284-316, June.
- Kelvin Balcombe & Hristos Doucouliagos & Iain Fraser, 2007.
"Input usage, output mix and industry deregulation: an analysis of the Australian dairy manufacturing industry ,"
Australian Journal of Agricultural and Resource Economics,
Australian Agricultural and Resource Economics Society, vol. 51(2), pages 137-156, 06.
- Balcombe, Kelvin George & Doucouliagos, Hristos & Fraser, Iain, 2007. "Input usage, output mix and industry deregulation: an analysis of the Australian dairy manufacturing industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), June.
- Kevin Balcombe & Hristos Doucouliagos & Iain Fraseer, 2006. "Input Usage, Ouput Mix and Industry Deregulation: An Analysis of the Australian Dairy Manufacturing Industry," Economics Series 2006_27, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
- Terrell, Dek, 1996. "Incorporating Monotonicity and Concavity Conditions in Flexible Functional Forms," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(2), pages 179-94, March-Apr.
- Diewert, Walter E & Wales, Terence J, 1987.
"Flexible Functional Forms and Global Curvature Conditions,"
Econometric Society, vol. 55(1), pages 43-68, January.
- W. Erwin Diewert & T.J. Wales, 1989. "Flexible Functional Forms and Global Curvature Conditions," NBER Technical Working Papers 0040, National Bureau of Economic Research, Inc.
- AM Alvarez & EG Fidalgo & RJ Sexton & M Zhang, 2000. "Oligopsony power with uniform spatial pricing: theory and application to milk processing in Spain," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(3), pages 347-364, September.
- 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.
- Antonio Alvarez & Carlos Arias & Luis Orea, 2006. "Explaining Differences in Milk Quota Values: The Role of Economic Efficiency," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 182-193.
- O'Donnell, Christopher J. & Coelli, Timothy J., 2005.
"A Bayesian approach to imposing curvature on distance functions,"
Journal of Econometrics,
Elsevier, vol. 126(2), pages 493-523, June.
- Tim J. Coelli & Chris O'Donnell, 2003. "A Bayesian Approach To Imposing Curvature On Distance Functions," CEPA Working Papers Series WP032003, School of Economics, University of Queensland, Australia.
- Lau, Lawrence J & Yotopoulos, Pan A, 1971. "A Test for Relative Efficiency and Application to Indian Agriculture," American Economic Review, American Economic Association, vol. 61(1), pages 94-109, March.
- Colman, David, 2000. "Inefficiencies in the UK milk quota system," Food Policy, Elsevier, vol. 25(1), pages 1-16, February.
- J. Sauer & B. Balint, 2008. "Distorted prices and producer efficiency: the case of Romania," Journal of Productivity Analysis, Springer, vol. 29(2), pages 131-142, April.
- John Geweke, 1992.
"Priors for macroeconomic time series and their application,"
Discussion Paper / Institute for Empirical Macroeconomics
64, Federal Reserve Bank of Minneapolis.
- Geweke, John, 1994. "Priors for Macroeconomic Time Series and Their Application," Econometric Theory, Cambridge University Press, vol. 10(3-4), pages 609-632, August.
- Catherine J. Morrison Paul & Warren E. Johnston & Gerald A. G. Frengley, 2000. "Efficiency in New Zealand Sheep and Beef Farming: The Impacts of Regulatory Reform," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 325-337, May.
- Ann C. Ewasechko & Theodore M. Horbulyk, 1995. "Interprovincial Reallocation of Market Sharing Quota for Industrial Milk," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 43(2), pages 191-202, 07.
- Kloek, Tuen & van Dijk, Herman K, 1978. "Bayesian Estimates of Equation System Parameters: An Application of Integration by Monte Carlo," Econometrica, Econometric Society, vol. 46(1), pages 1-19, January.
- Hailu, Atakelty & Veeman, Terrence S., 2000. "Environmentally Sensitive Productivity Analysis of the Canadian Pulp and Paper Industry, 1959-1994: An Input Distance Function Approach," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 251-274, November.
- Kumbhakar, Subal C, 1989. "Estimation of Technical Efficiency Using Flexible Functional Form and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 7(2), pages 253-58, April.
- Johannes Sauer, 2006. "Economic Theory and Econometric Practice: Parametric Efficiency Analysis," Empirical Economics, Springer, vol. 31(4), pages 1061-1087, November.
- Daan L. Ooms & Jack H. M. Peerlings, 2005. "Effects of EU dairy policy reform for Dutch dairy farming: a primal approach using GMM estimation," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(4), pages 517-537, December.
- Atkinson, Scott E & Cornwell, Christopher & Honerkamp, Olaf, 2003. "Measuring and Decomposing Productivity Change: Stochastic Distance Function Estimation versus Data Envelopment Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 284-94, April.
- Stefanou, Spiro E, et al, 1992. "Dynamic Structure of Production under a Quota: The Case of Milk Production in the Federal Republic of Germany," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 19(3), pages 283-99.
- Peter Bogetoft & Kurt Nielsen & Henrik Ballebye Olesen, 2003. "The single-bid restriction on milk quota exchanges," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(2), pages 193-215, June.
- John Geweke, 1999. "Using Simulation Methods for Bayesian Econometric Models," Computing in Economics and Finance 1999 832, Society for Computational Economics.
- 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.
- Lovell, C A Knox & Sickles, Robin C, 1983. "Testing Efficiency Hypotheses in Joint Production: A Parametric Approach," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 51-58, February.
- repec:rpp:wpaper:9605 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:ags:aes008:36869. 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: (AgEcon Search)
If references are entirely missing, you can add them using this form.