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Modeling heterogeneous technologies in the presence of sample selection: The case of dairy farms and the adoption of agri‐environmental schemes in France
Language
EN
Article de revue
This item was published in
Agricultural Economics. 2021-12, vol. 53, n° 3, p. 422-438
English Abstract
In this article, we assess farms’ technical efficiency accounting for their production heterogeneity and correcting for the potential endogeneity associated with the adoption of Common Agricultural Policy (CAP) agri-environmental ...Read more >
In this article, we assess farms’ technical efficiency accounting for their production heterogeneity and correcting for the potential endogeneity associated with the adoption of Common Agricultural Policy (CAP) agri-environmental schemes (AESs). We estimate a first-step selection probit model. In a second step we estimate the latent class stochastic frontier model (LCSFM) separately on each of the two sub-samples, the AESs adopters and the AESs non-adopters. We also account for heteroscedasticity in the estimation of inefficiency effects in the LCSFM within each sub-sample. The application is to Farm Accountancy Data Network (FADN) dairy farms in France during 2002–2016. We identify one class with intensive technology and one class with extensive technology for each of the two sub-samples. The investigation of inefficiency effects shows that modeling production heterogeneity could help better target the CAP, since the relationship between operational subsidies and farms' efficiency differs depending on whether or not production heterogeneity is accounted for.Read less <
English Keywords
agri-environmental schemes
efficiency
farms
France
heterogeneous technologies
latent class
sample selection