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Abstract

This study analyzes the determinants of TE among traditional dairy farms in the State of Wisconsin taking into account dairy farms’ heterogeneity. To do so, we first estimate a production frontier and the level of TE using the SPF framework. Then we analyze the determinants of TI using a quantile regression analysis. The results indicate that the determinants of TE affect in very specific ways farmers with different levels of TE. This result confirms our hypothesis on the importance of controlling for farm heterogeneity when analyzing the determinants of TE. This issue is also important from an empirical point of view. Policy makers could improve the effectiveness of their work by targeting specific agricultural services and aid designed for farmers with different level of TE.

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