One of the foremost objectives of the Common Agricultural Policy (CAP) in the European Union (EU) is to increase agricultural productivity through subsidization of farmers. However, little empirical research has been done to examine the effect of subsidies on farm performance and, in particular,...

In this paper we consider a novel stochastic frontier model with multi-output multi-input production technology that accommodates non-radial inefficiency in both inputs and outputs. These measures are also observation-specific. To identify them, we use (i) a system model consisting of the...

This paper considers a model that accommodates both output and input-specific inefficiency components (inputslacks). We use a translog function to represent the underlying production technology in which the input slacksare generalized to have both deterministic (functions of exogenous variables)...

In their seminal paper Bloom and Van Reenen (2007) showed that management practices correlate with firm performance. In many instances empirical researchers do not observe management practices. They usually resort to performance estimates as proxies for management practices. We ask whether two...

This paper deals with estimation of technical change through changes in input factor efficiency/productivity. The main advantage of this factor augmenting (FA) approach, unlike the generic time trend models of technical change, is that one can measure input-specific productivity, change in input...

In this paper, we propose simulation based Bayesian inference procedures in a cost system that includes the cost function and the cost share equations augmented to accommodate technical and allocative inefficiency. Markov Chain Monte Carlo techniques are proposed and implemented for Bayesian...

This article deals with specification and estimation of risk preferences, production risk, and technical inefficiency. It makes contribution in three separate areas of production economics. First, we model producers' attitude toward risk and derive risk preference functions (without assuming any...

We introduce the concept “excess capital capacity” and employ a stochastic input requirement frontier to measure excess capital capacity in agricultural production. We also propose a two-step estimation method that allows endogenous regressors in stochastic frontier models. The first step...