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Technical, Allocative, and Economic Efficiency in Swedish Dairy Farms: The Data Envelopment Analysis Versus the Stochastic Frontier Approach

  • Johansson, Helena
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    Technical, allocative, and economic input efficiency scores were estimated for an unbalanced panel of Swedish dairy farms, using data envelopment analysis (DEA) and the stochastic frontier approach (SFA). By comparing the results it was concluded that when the entire dairy farm is studied the DEA is more appropriate to use since it does not require any particular parametric form to be chosen. The average DEA technical, allocative and economic efficiency indices were eventually found to be 0.77, 0.57, and 0.43 respectively. The influence of size on the efficiency scores was analyzed and significant evidence indicating a positive relationship between size and efficiency was found. Finally it was concluded that the main challenge facing the Swedish dairy farms is to enhance their cost minimizing skills.

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    File URL: http://purl.umn.edu/24478
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    Paper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24478.

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    Date of creation: 2005
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    Handle: RePEc:ags:eaae05:24478
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    1. Coelli, Tim J., 1995. "Recent Developments In Frontier Modelling And Efficiency Measurement," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 39(03), December.
    2. Blank, Steven C., 2005. "The Business of an Agricultural “Way of Life”," Choices, Agricultural and Applied Economics Association, vol. 20(2).
    3. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    4. Alvarez, Antonio & Arias, Carlos, 2004. "Technical efficiency and farm size: a conditional analysis," Agricultural Economics, Blackwell, vol. 30(3), pages 241-250, May.
    5. Kopp, Raymond J. & Diewert, W. Erwin, 1982. "The decomposition of frontier cost function deviations into measures of technical and allocative efficiency," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 319-331, August.
    6. Coelli, Tim & Perelman, Sergio, 1999. "A comparison of parametric and non-parametric distance functions: With application to European railways," European Journal of Operational Research, Elsevier, vol. 117(2), pages 326-339, September.
    7. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    8. Bailey, DeeVon & Biswas, Basudeb & Kumbhakar, Subal C. & Schulthies, B. Kris, 1989. "An Analysis Of Technical, Allocative, And Scale Inefficiency: The Case Of Ecuadorian Dairy Farms," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(01), July.
    9. Iraizoz, Belen & Rapun, Manuel & Zabaleta, Idoia, 2003. "Assessing the technical efficiency of horticultural production in Navarra, Spain," Agricultural Systems, Elsevier, vol. 78(3), pages 387-403, December.
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