Publication type: Working paper – expertise – study
Title: Estimating persistent and transient technical efficiency in the presence of heterogeneity and endogeneity
Authors: Bokusheva, Raushan
Čechura, Lukáš
Kumbhakar, Subal C
et. al: No
Extent: 28
Issue Date: 26-Sep-2020
Language: English
Subjects: Transient and persistent technical efficiency; Input distance function; Endogeneity; Policy impact; French crop farm
Subject (DDC): 338: Production
Abstract: This paper develops an estimation procedure to obtain consistent estimates of technology as represented by the input distance function, and to identify determinants of both transient and persistent technical inefficiency. The procedure accounts for two sources of potential endogeneity: (i) due to firm heterogeneity and (ii) due to simultaneity of input use decisions and technical efficiency. We employ this procedure to examine the effect of direct payments and farm size on the persistent and transient technical efficiency of French crop farms before and after the European Union´s Common Agricultural Policy decoupling reform of 2003. Our empirical results show that neither direct payments per hectare of utilized agricultural land nor farm size had any significant effect on the persistent component of farm technical efficiency in the considered periods. Neither of the two environmental variables explained the variation in the transient technical efficiency component in the period before decoupling. However, our model estimates suggest that larger farms might have experienced higher short-run adjustment costs in the process of adapting to the political and economic environment after the reform than their small and medium-sized counterparts.
License (according to publishing contract): Licence according to publishing contract
Departement: Life Sciences and Facility Management
Organisational Unit: Institute of Natural Resource Sciences (IUNR)
Appears in collections:Publikationen Life Sciences und Facility Management

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