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MODELING HETEROGENEITY IN PRODUCTION MODELS. EMPIRICAL EVIDENCE FROM INDIVIDUAL FARMING IN POLAND

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Hockmann H., Pieniadz A., Goraj L.
Zagadnienia Ekonomiki Rolnej
|
2007
|
issue 3(312)
24-41
EN
This paper deals with the estimation of a random coefficient model. The virtue of this approach is that it considers farm heterogeneity, which conventional SFA models do not. When the model is applied to Polish farms, the results indicate that the conventional random and fixed effect models overestimate the inefficiency score. In addition, the reasons for inefficiency are analyzed. It is shown that despite the fragmentation of the Polish agriculture, there is no evidence for scale inefficiency. Moreover, inefficiency could partly be attributed to factors, which affect the management input and requirements on farms.
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