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Abstract

This paper examined farmers' country bean production technology and proposed an econometric model for estimating the normalized profit distribution function using a Three Staged Generalized Method of Moment procedure. The advantage of the model is that it used Cobb-Douglas form of profit function which is linear in logarithm. The second moment function of profit can be used for measuring risk involved in input use under uncertainty. Furthermore, the results could be used for testing relative economic efficiency of growers'. The empirical data on country bean production validated the model. The result showed that fertilizers and pesticides were risk increasing inputs in country bean production. The small farmers were found to be more efficient. The study concludes that under uncertain environmental condition, relative economic efficiency can be assessed through estimation of normalized profit distribution function.

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