Uncertainty and Technical Efficiency in Finnish Agriculture: A State-contingent Approach

In this article, we present one of the first real-world empirical applications of state-contingent production theory. Our state-contingent behavioral model allows us to analyze production under both inefficiency and uncertainty without regard to the nature of producer risk preferences. Using farm data for Finland, we estimate a flexible production model that permits substitutability between state-contingent outputs. We test empirically, and reject, an assumption that has been implicit in almost all efficiency studies conducted in the last three decades, namely that the production technology is output-cubical, i.e., that outputs are not substitutable between states of nature.


Issue Date:
2010
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/151192
Total Pages:
25
JEL Codes:
Q10; Q24; Q25
Series Statement:
Risk and Uncertainty Program
R10/2




 Record created 2017-04-01, last modified 2017-08-27

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)