Estimating a Profit Function in the Presence of Inefficiency: An Application to Russian Agriculture
The relationship among cost functions, distance functions, and technical inefficiency are utilized to show how technical inefficiency scores can be incorporated into the specification of a profit function and a related system of output supply and input demands. A method also is introduced for incorp...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Western Agricultural Economics Association
2002-07-01
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| Series: | Journal of Agricultural and Resource Economics |
| Subjects: | |
| Online Access: | https://ageconsearch.umn.edu/record/31089 |
| _version_ | 1818380043565400064 |
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| author | Carlos Anthony Arnade Michael A. Trueblood |
| author_facet | Carlos Anthony Arnade Michael A. Trueblood |
| author_sort | Carlos Anthony Arnade |
| collection | DOAJ |
| description | The relationship among cost functions, distance functions, and technical inefficiency are utilized to show how technical inefficiency scores can be incorporated into the specification of a profit function and a related system of output supply and input demands. A method also is introduced for incorporating allocative efficiency scores into the same system. The theoretical and empirical approach requires fewer assumptions than those made in many studies. An illustrative example is provided for Russian agriculture for 1194-95, a period when significant technical and allocative inefficiency was known to exist. The results demonstrate inefficiency limits the supply response to prices, thus leading to lower estimates of output response compare to a traditional supply model in which efficiency is assumed. |
| first_indexed | 2024-12-14T02:12:24Z |
| format | Article |
| id | doaj.art-8eee7d7a1457476d9913d58e970589d3 |
| institution | Directory Open Access Journal |
| issn | 1068-5502 2327-8285 |
| language | English |
| last_indexed | 2024-12-14T02:12:24Z |
| publishDate | 2002-07-01 |
| publisher | Western Agricultural Economics Association |
| record_format | Article |
| series | Journal of Agricultural and Resource Economics |
| spelling | doaj.art-8eee7d7a1457476d9913d58e970589d32022-12-21T23:20:43ZengWestern Agricultural Economics AssociationJournal of Agricultural and Resource Economics1068-55022327-82852002-07-012719411310.22004/ag.econ.3108931089Estimating a Profit Function in the Presence of Inefficiency: An Application to Russian AgricultureCarlos Anthony ArnadeMichael A. TruebloodThe relationship among cost functions, distance functions, and technical inefficiency are utilized to show how technical inefficiency scores can be incorporated into the specification of a profit function and a related system of output supply and input demands. A method also is introduced for incorporating allocative efficiency scores into the same system. The theoretical and empirical approach requires fewer assumptions than those made in many studies. An illustrative example is provided for Russian agriculture for 1194-95, a period when significant technical and allocative inefficiency was known to exist. The results demonstrate inefficiency limits the supply response to prices, thus leading to lower estimates of output response compare to a traditional supply model in which efficiency is assumed.https://ageconsearch.umn.edu/record/31089distance functionprofit functionrussiasupply responsetechnical efficiency |
| spellingShingle | Carlos Anthony Arnade Michael A. Trueblood Estimating a Profit Function in the Presence of Inefficiency: An Application to Russian Agriculture Journal of Agricultural and Resource Economics distance function profit function russia supply response technical efficiency |
| title | Estimating a Profit Function in the Presence of Inefficiency: An Application to Russian Agriculture |
| title_full | Estimating a Profit Function in the Presence of Inefficiency: An Application to Russian Agriculture |
| title_fullStr | Estimating a Profit Function in the Presence of Inefficiency: An Application to Russian Agriculture |
| title_full_unstemmed | Estimating a Profit Function in the Presence of Inefficiency: An Application to Russian Agriculture |
| title_short | Estimating a Profit Function in the Presence of Inefficiency: An Application to Russian Agriculture |
| title_sort | estimating a profit function in the presence of inefficiency an application to russian agriculture |
| topic | distance function profit function russia supply response technical efficiency |
| url | https://ageconsearch.umn.edu/record/31089 |
| work_keys_str_mv | AT carlosanthonyarnade estimatingaprofitfunctioninthepresenceofinefficiencyanapplicationtorussianagriculture AT michaelatrueblood estimatingaprofitfunctioninthepresenceofinefficiencyanapplicationtorussianagriculture |