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The Relationship Between Technical Efficiency and Farm Size

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  • Álvarez, Antonio
  • Arias, Carlos

Abstract

This paper analyzes the relationship between technical efficiency and size in the framework provided by a production model. Technical efficiency is introduced in the model as a parameter, as a result of which it affects both the input demand and output supply of a profit maximizing producer. This framework allows us to study the theoretical relationship between technical efficiency and size. An empirical application explores this relationship using panel data of dairy farms in Spain.

Suggested Citation

  • Álvarez, Antonio & Arias, Carlos, 2001. "The Relationship Between Technical Efficiency and Farm Size," Efficiency Series Papers 2001/05, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
  • Handle: RePEc:oeg:wpaper:2001/05
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    File URL: https://www.unioviedo.es/oeg/ESP/esp_2001_05.pdf
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    References listed on IDEAS

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    1. Barrett, Christopher B., 1996. "On price risk and the inverse farm size-productivity relationship," Journal of Development Economics, Elsevier, vol. 51(2), pages 193-215, December.
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    3. Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 53-82.
    4. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    5. Giancarlo Moschini, 1988. "The Cost Structure of Ontario Dairy Farms: A Microeconometric Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(2), pages 187-206, July.
    6. Bagi, Faqir Singh, 1982. "Relationship Between Farm Size And Technical Efficiency In West Tennessee Agriculture," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 14(2), pages 1-6, December.
    7. Bagi, Faqir Singh, 1982. "Relationship Between Farm Size and Technical Efficiency in West Tennessee Agriculture," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 14(2), pages 139-144, December.
    8. Atkinson, Scott E & Cornwell, Christopher, 1994. "Estimation of Output and Input Technical Efficiency Using a Flexible Form and Panel Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 245-255, February.
    9. 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.
    10. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-374, October.
    11. Yuengert, Andrew M., 1993. "The measurement of efficiency in life insurance: Estimates of a mixed normal-gamma error model," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 483-496, April.
    12. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
    13. Philip Lund & Roger Price, 1998. "The Measurement of Average Farm Size," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(1), pages 100-110, March.
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    15. Karl Lundvall & George Battese, 2000. "Firm size, age and efficiency: Evidence from Kenyan manufacturing firms," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 146-163.
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    Cited by:

    1. 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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    Keywords

    technical efficiency; size; dairy farms; panel data;

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