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Switching toward capital‐intensive technologies in Finnish dairy farms

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  • Kyösti Pietola
  • Anna‐Maija Heikkilä

Abstract

We analyze dairy farmers' decisions to switch from the traditional labor‐intensive tied‐housing system to a more capital‐intensive free‐stall housing. The choice of the housing system is modeled as a sequence of interrelated choices. Errors that are consistent with the observed choices are simulated and used to control for serial correlation and farm‐specific fixed effects. The sequence of choices is estimated by the GHK simulation technique and simulated maximum likelihood (SML). The results suggest that the switch toward more capital‐intensive free‐stall housing responds positively and elastically to investment grants and a farmer's capital resources. In addition, positive revenue shocks significantly encourage switches to free‐stall housing.

Suggested Citation

  • Kyösti Pietola & Anna‐Maija Heikkilä, 2005. "Switching toward capital‐intensive technologies in Finnish dairy farms," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 381-387, November.
    • Handle: RePEc:bla:agecon:v:33:y:2005:i:s3:p:381-387
    DOI: 10.1111/j.1574-0864.2005.00078.x
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    Cited by:

    1. Heikkilä, Anna-Maija & Myyrä, Sami & Pietola, Kyösti, 2012. "Effects of Economic Factors on Adoption of Robotics and Consequences of Automation for Productivity Growth of Dairy Farms," Factor Markets Working Papers 142, Centre for European Policy Studies.
    2. Benedikt Kramer & Anke Schorr & Reiner Doluschitz & Markus Lips, 2019. "Short and medium-term impact of dairy barn investment on profitability and herd size in Switzerland," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(6), pages 270-277.
    3. Piotr Bórawski & Adam Pawlewicz & Andrzej Parzonko & Jayson, K. Harper & Lisa Holden, 2020. "Factors Shaping Cow’s Milk Production in the EU," Sustainability, MDPI, vol. 12(1), pages 1-15, January.

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