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Multi-input Multi-output Farm-level Cost Function: A Comparison of Least Squares and Entropy Estimators

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  • Polome, Philippe
  • Fernagut, Bruno
  • Harmignie, Olivier
  • Frahan, Bruno Henry de

Abstract

We introduce a modification of the quadratic-Leontieff multi-output cost function that is particularly suitable for the data of the Farm Accountancy Data Network. We present least squares and entropy estimates of that function and compare their results for a sample of crop farms. Our results are encouraging for the use of entropy estimators in cases in which farms are not assumed to share the same technology. Our approach can be seen as an extension of the Positive Mathematical Programming approach (Howitt, 1995). The extension consists in an explicit specification of inputs in the cost function and in the possibility of modeling several farms simultaneously.

Suggested Citation

  • Polome, Philippe & Fernagut, Bruno & Harmignie, Olivier & Frahan, Bruno Henry de, 2005. "Multi-input Multi-output Farm-level Cost Function: A Comparison of Least Squares and Entropy Estimators," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24727, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae05:24727
    DOI: 10.22004/ag.econ.24727
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    References listed on IDEAS

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    1. Moro, Daniele & Sckokai, Paolo, 1999. "Modelling the CAP Arable Crop Regime in Italy : Degree of Decoupling and Impact of Agenda 2000," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 53.
    2. Thomas Heckelei & Hendrik Wolff, 2003. "Estimation of constrained optimisation models for agricultural supply analysis based on generalised maximum entropy," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 30(1), pages 27-50, March.
    3. Wolfgang Britz & Thomas Heckelei & Hendrik Wolff, 2003. "Symmetric Positive Equilibrium Problem: A Framework for Rationalizing Economic Behavior with Limited Information: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 1078-1081.
    4. Robert G. Chambers & Richard E. Just, 1989. "Estimating Multioutput Technologies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(4), pages 980-995.
    5. Richard E. Howitt, 1995. "Positive Mathematical Programming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 329-342.
    6. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, September.
    7. Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers Archive 1488, Iowa State University, Department of Economics.
    8. Sckokai, Paolo & Moro, Daniele, 2002. "Modelling The Cap Arable Crop Regime Under Uncertainty," 2002 Annual meeting, July 28-31, Long Beach, CA 19860, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Quirino Paris, 2001. "Symmetric Positive Equilibrium Problem: A Framework for Rationalizing Economic Behavior with Limited Information," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 1049-1061.
    10. Quirino Paris & Richard E. Howitt, 1998. "An Analysis of Ill-Posed Production Problems Using Maximum Entropy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 124-138.
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    Cited by:

    1. Frahan, Bruno Henry de, 2005. "PMP, Extensions and Alternative Methods: Introductory Review of the State of the Art," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24537, European Association of Agricultural Economists.
    2. Heckelei, Thomas & Britz, Wolfgang, 2005. "Models Based on Positive Mathematical Programming: State of the Art and Further Extensions," 89th Seminar, February 2-5, 2005, Parma, Italy 234607, European Association of Agricultural Economists.

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