Hostname: page-component-78c5997874-ndw9j Total loading time: 0 Render date: 2024-11-19T02:48:06.865Z Has data issue: false hasContentIssue false
  • English
  • Français

Finite Mixture Estimation of Size Economies and Cost Frontiers in the Face of Multiple Production Technologies

Published online by Cambridge University Press:  28 April 2015

H. Arlen Smith  and
C. Robert Taylor
H. Arlen Smith
Affiliation:
College of Agriculture, Auburn University
C. Robert Taylor
Affiliation:
College of Agriculture, Auburn University
Get access Rights & Permissions [Opens in a new window]

Abstract

Finite mixture estimation (FME) is compared to estimated generalized least squares (EGLS) in the estimation of economies of size and production cost frontiers for Alabama dairy farms. FME provides several unique insights into the economic forces behind recent changes in Alabama's dairy industry. FME provides estimation of a stochastic average cost frontier with known statistical properties, which it was not otherwise possible to obtain using available stochastic frontier estimation packages.

Keywords

dairyeconomies of sizefinite mixture estimationstochastic cost frontier
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 30 , Issue 2 , December 1998 , pp. 379 - 388
Copyright
Copyright © Southern Agricultural Economics Association 1998

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ahearn, M.C., Whittaker, G.W., and El-Osta, H.. “The Production Cost-Size Relationship: Measurement Issues and Estimates for Three Major Crops.” In Size, Structure, and the Changing Face of American Agriculture, ed., Hallam, A., pp. 107-49. Boulder CO: Westview Press, Inc., 1993.Google Scholar
Aigner, D., Lovell, C.A.K., and Schmidt, P.. “Formulation and Estimation of Stochastic Frontier Production Function Models.” J. Econometrics 6(1977):21–37.CrossRefGoogle Scholar
Beard, T.R., Caudill, S.B., and Gropper, D.M.. “Finite Mixture Estimation of Multiproduct Cost Functions.” Rev. Econ. and Statis. LXXIII,4(1991):654-64.CrossRefGoogle Scholar
Bertrand, J.A., Butcher, K.R., Carpenter, L.M., Clay, J.S., Coleman, D.A., Dillon, W.M., Hank, S.J., Lee, K.L., Olson, K.E., McAllister, A.J., Miller, W.M., Mitchell, J.W., Nault, M.T., Sargent, F.D., Smith, J.W., Tomaszewski, M.A., and Webb, D.W.. DHI Manual. Dairy Records Processing Center, Raleigh NC, 1991.Google Scholar
Boehlje, M. “Economies of Size—Some Brief Observations.” In Economies of Size Studies. Proceedings of Purdue University Workshop, 3-4 August 1983. Center for Agricultural and Rural Development, Iowa State University, Ames IA, 1984.Google Scholar
Casler, G.L. “Use of Firm-Level Agricultural Data Collected and Managed at the State Level for Studying Farm Size Issues.” In Size, Structure, and the Changing Face of American Agriculture, ed., Hallam, A., pp. 251-83. Boulder CO: Westview Press, Inc., 1993.Google Scholar
Caudill, S.B. “Estimation of Stochastic Frontiers Using FME.” Departmental Seminar, Dept. of Agr. Econ. and Rural Sociol., Auburn University College of Agriculture, 1995.Google Scholar
Chavas, J.P., and Klemme, R.M.. “Aggregate Milk Supply Response and Investment Behavior on U.S. Dairy Farms.” Amer. J. Agr. Econ. 68(1986):55–66.CrossRefGoogle Scholar
Council of Economic Advisors. Economic Report of the President. Washington DC: U.S. Government Printing Office, 1996.Google Scholar
Dempster, A., Laird, N.M., and Rubin, D.B.. “Maximum Likelihood from Incomplete Data via the EM Algorithm.” J. Royal Statis. Soc, Ser. B, 39(1977)1–38.Google Scholar
Forsund, F.R., Lovell, C.A.K., and Schmidt, P.. “A Survey of Frontier Production Functions and Their Relationship to Efficiency Measurement.” J. Econometrics 13(1980):5–25.CrossRefGoogle Scholar
Garcia, P., and Sonka, S.T.. “Methodological Issues in Assessing Economies of Size: Selected Positive Analytic Approaches.” In Economies of Size Studies. Proceedings of Purdue University Workshop, 3-4 August 1983. Center for Agricultural and Rural Development, Iowa State University, Ames IA, 1984.Google Scholar
Greene, W.H. “On Estimation of a Flexible Frontier Production Function.” J. Econometrics 13(1980a):101-15.CrossRefGoogle Scholar
Greene, W.H. “A Gamma-Distributed Stochastic Frontier Model.” J. Econometrics 46(1990):141-63.CrossRefGoogle Scholar
Greene, W.H. “Maximum Likelihood Estimation of Econometric Frontier Functions.” J. Econometrics 13(1980b):27–56.CrossRefGoogle Scholar
Hallam, A. “Economies of Size: Theory, Measurement, and Related Issues.” In Size, Structure, and the Changing Face of American Agriculture, ed., Hallam, A., pp. 150–203. Boulder CO: Westview Press, Inc., 1993a.Google Scholar
Hallam, A. “Empirical Studies of Size, Structure, and Efficiency in Agriculture.” In Size, Structure, and the Changing Face of American Agriculture, ed., Hallam, A., pp. 208-09. Boulder CO: Westview Press, Inc., 1993b.Google Scholar
Harrington, D.H. “Purposes and Uses of Economies of Size Studies.” In Economies of Size Studies. Proceedings of Purdue University Workshop, 3-4 August 1983. Center for Agricultural and Rural Development, Iowa State University, Ames IA, 1984.Google Scholar
Hartley, M.J. “‘Estimating Mixtures of Normal Distributions’: Comment.” J. Amer. Statis. Assoc. 73,364(December 1978):738-41.Google Scholar
Harvey, A.C. “The Econometric Analysis of Time Series.” New York: John Wiley and Sons, Inc./Halstead Press, 1984.Google Scholar
Heady, E.O. “Purposes and Uses of Economies of Size Studies.” In Economies of Size Studies. Proceedings of Purdue University Workshop, 3-4 August 1983. Center for Agricultural and Rural Development, Iowa State University, Ames IA, 1984.Google Scholar
Hildreth, R.J. “Economies of Size Studies: Knowledge Gaps and Priorities for Future Work.” In Economies of Size Studies. Proceedings of Purdue University Workshop, 3-4 August 1983. Center for Agricultural and Rural Development, Iowa State University, Ames IA, 1984.Google Scholar
Miller, T.A. “Conceptual Issues in Economies of Size Studies: How Assumptions Drive Away Research.” In Economies of Size Studies. Proceedings of Purdue University Workshop, 3-4 August 1983. Center for Agricultural and Rural Development, Iowa State University, Ames IA, 1984.Google Scholar
Moschini, G. “The Cost Structure of Ontario Dairy Farms.” Can. J. Agr. Econ. 36(1988):187–206.CrossRefGoogle Scholar
Moschini, G. “Nonparametric and Semiparametric Estimation: An Analysis of Multiproduct Returns to Scale.” Amer. J. Agr. Econ. 72(1990):589-96.CrossRefGoogle Scholar
Olson, J.A., Schmidt, P., and Waldman, D.M.. “A Monte Carlo Study of Estimators of Stochastic Frontier Production Functions.” J. Econometrics 13(1980):67–82.CrossRefGoogle Scholar
Quandt, R. “A New Approach to Estimating Switching Regressions.” J. Amer. Statis. Assoc. 67,17(June 1972):306-10.CrossRefGoogle Scholar
Quandt, R., and Ramsey, J.. “Estimating Mixtures of Normal Distributions and Switching Regressions.” J. Amer. Statis. Assoc. 73,364(December 1978):735-47.Google Scholar
Schmidt, P., and Lovell, C.A.K.. “Estimating Stochastic Production and Cost Frontiers When Technical and Allocative Inefficiency Are Correlated.” J. Econometrics 13(1980):83–100.CrossRefGoogle Scholar
Schmidt, P., and Lovell, C.A.K.. “Estimating Technical and Allocative In efficiency Relative to Stochastic Production and Cost Frontiers.” J. Econometrics 9(1979):343-66.CrossRefGoogle Scholar
Smith, H.A. “Growth and Consolidation in Alabama's Dairy Industry.” Unpub. Ph.D. diss., Dept. of Agr. Econ. and Rural Sociol., College of Agriculture, Auburn University, 1996.Google Scholar
Smith, H.A., Taylor, C.R., and Moss, B.R.. “Alabama Dairy Industry: Trend and Status.” Pub. No. ES94-3, College of Agriculture and Alabama Agr. Exp. Sta., Auburn University, April 1994.Google Scholar
Stevenson, R.E. “Likelihood Functions for Generalized Stochastic Frontier Estimation.” J. Econometrics 13(1980):57–66.CrossRefGoogle Scholar
Tauer, L.W. “Do New York Dairy Farmers Maximize Profits or Minimize Costs?” Amer. J. Agr. Econ. 77(1995):421-29.CrossRefGoogle Scholar
U.S. Department of Agriculture. Agricultural Outlook. USDA/Economic Research Service, Washington DC, 1996.Google Scholar
van den Broeck, J., Forsund, F.R., Hjalmarsson, L., and Meesum, W.. “On the Estimation of Deterministic and Stochastic Frontier Production Functions.” J. Econometrics 13(1980):117-38.CrossRefGoogle Scholar
Waldman, D.M. “A Stationary Point for the Stochastic Frontier Likelihood.” J. Econometrics 18(1982):275-79.CrossRefGoogle Scholar
Weersink, A., and Tauer, L.W.. “Causality Between Dairy Farm Size and Productivity.” Amer. J. Agr. Econ. 73(1991):1138-45.CrossRefGoogle Scholar