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Estimation of Cost Allocation Coefficients at the Farm Level Using an Entropy Approach

Author

Listed:
  • Rui Fragoso

    (University of Évora, Department of Management, CEFAGE/ICAAM)

  • Maria Leonor Carvalho

    (University of Évora, Department of Economics, ICAAM/CEFAGE)

Abstract

This paper aims to estimate the farm cost allocation coefficients from whole farm input costs. An entropy approach was developed under a Tobit formulation and was applied to a sample of farms from the 2004 FADN data base for Alentejo region, Southern Portugal. A Generalized Maximum Entropy model and Cross Generalized Entropy model were developed to the sample conditions and were tested. Model results were assessed in terms of their precision and estimation power and were compared with observed data. The entropy approach showed to be a flexible and valid tool to estimate incomplete information, namely regarding farm costs.

Suggested Citation

  • Rui Fragoso & Maria Leonor Carvalho, 2011. "Estimation of Cost Allocation Coefficients at the Farm Level Using an Entropy Approach," CEFAGE-UE Working Papers 2011_21, University of Evora, CEFAGE-UE (Portugal).
    • Handle: RePEc:cfe:wpcefa:2011_21
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    References listed on IDEAS

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    Cited by:

    1. António Xavier & Rui Fragoso & Maria De Belém Costa Freitas & Maria Do Socorro Rosário & Florentino Valente, 2018. "A Minimum Cross-Entropy Approach to Disaggregate Agricultural Data at the Field Level," Land, MDPI, vol. 7(2), pages 1-16, May.

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    Keywords

    Generalized maximum entropy; costs; estimation; Alentejo; FADN.;
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