Farms' technical inefficiencies in the presence of government programs

Teresa Serra, David Zilberman, José M. Gil

Research output: Contribution to journalArticlepeer-review

Abstract

We focus on determining the impacts of government programs on farms' technical inefficiency levels. We use Kumbhakar's stochastic frontier model that accounts for both production risks and risk preferences. Our theoretical framework shows that decoupled government transfers are likely to increase (decrease) DARA (IARA) farmers' production inefficiencies if variable inputs are risk decreasing. However, the impacts of decoupled payments cannot be anticipated if variable inputs are risk increasing. We use farm-level data collected in Kansas to illustrate the model.

Original languageEnglish (US)
Pages (from-to)57-76
Number of pages20
JournalAustralian Journal of Agricultural and Resource Economics
Volume52
Issue number1
DOIs
StatePublished - Mar 2008
Externally publishedYes

Keywords

  • Just and Pope production function
  • Risk preferences
  • Stochastic frontier models

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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