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Modeling heterogeneous technologies in the presence of sample selection: The case of dairy farms and the adoption of agri‐environmental schemes in France

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  • K Hervé Dakpo
  • Laure Latruffe
  • Yann Desjeux
  • Philippe Jeanneaux

Abstract

In this article, we assess farms’ technical efficiency accounting for their production heterogeneity and correcting for the potential endogeneity associated with the adoption of Common Agricultural Policy (CAP) agri‐environmental schemes (AESs). We estimate a first‐step selection probit model. In a second step we estimate the latent class stochastic frontier model (LCSFM) separately on each of the two sub‐samples, the AESs adopters and the AESs non‐adopters. We also account for heteroscedasticity in the estimation of inefficiency effects in the LCSFM within each sub‐sample. The application is to Farm Accountancy Data Network (FADN) dairy farms in France during 2002–2016. We identify one class with intensive technology and one class with extensive technology for each of the two sub‐samples. The investigation of inefficiency effects shows that modeling production heterogeneity could help better target the CAP, since the relationship between operational subsidies and farms' efficiency differs depending on whether or not production heterogeneity is accounted for.

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  • K Hervé Dakpo & Laure Latruffe & Yann Desjeux & Philippe Jeanneaux, 2022. "Modeling heterogeneous technologies in the presence of sample selection: The case of dairy farms and the adoption of agri‐environmental schemes in France," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 422-438, May.
    • Handle: RePEc:bla:agecon:v:53:y:2022:i:3:p:422-438
    DOI: 10.1111/agec.12683
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    2. Mariarosaria Agostino & Ercan Enzo Comert & Federica Demaria & Sabrina Ruberto, 2024. "What kinds of subsidies affect technical efficiency? The case of Italian dairy farms," Agribusiness, John Wiley & Sons, Ltd., vol. 40(1), pages 116-138, January.
    3. K Hervé Dakpo & Yann Desjeux & Laure Latruffe, 2024. "Valuing Output Losses and Potential Pesticide Reduction in French Wine Production : Integrating Agronomic Principles in Production Frontier," Post-Print hal-04774502, HAL.
    4. Laure Latruffe & Andreas Niedermayr & Yann Desjeux & K Herve Dakpo & Kassoum Ayouba & Lena Schaller & Jochen Kantelhardt & Yan Jin & Kevin Kilcline & Mary Ryan & Cathal O’Donoghue, 2023. "Identifying and assessing intensive and extensive technologies in European dairy farming," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(4), pages 1482-1519.
    5. Gerling, Charlotte & Drechsler, Martin & Keuler, Klaus & Sturm, Astrid & Wätzold, Frank, 2022. "Time to consider the timing of conservation measures: designing cost-effective agri-environment schemes under climate change," MPRA Paper 113877, University Library of Munich, Germany.

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