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Abstract
This paper deals with the estimation of a
random coefficient model. The virtue of this approach
is that it considers firm heterogeneity, which
conventional SFA models do not. Applying the model
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 analysed. It is shown that
despite the fragmentation of Polish agriculture, there is
no evidence for scale inefficiency. Moreover,
inefficiency could partly be attributed to factors that
affect management input and requirements on farms.