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Direct payments, spatial competition and farm survival in Norway

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  • Storm, Hugo
  • Mittenzwei, Klaus
  • Heckelei, Thomas

Abstract

We argue that interdependencies between farms are crucial for assessing effects of direct payments on farmers exit decisions. Using spatially explicit farm level data for nearly all Norwegian farms, a binary choice model with spatially lagged explanatory variables is estimated in order to explain farm survival from 1999 to 2009. We show that ignoring spatial interactions between farm leads to a substantial overestimation of the effects of direct payments on farm survival. To our knowledge, this paper is the first attempt to empirically analyze the role of neighbor interactions for farm structural change in general and for an assessment of the effects of direct payments on farm survival in particular.

Suggested Citation

  • Storm, Hugo & Mittenzwei, Klaus & Heckelei, Thomas, 2013. "Direct payments, spatial competition and farm survival in Norway," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150022, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150022
    DOI: 10.22004/ag.econ.150022
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    References listed on IDEAS

    as
    1. Happe, Kathrin & Balmann, Alfons & Kellermann, Konrad & Sahrbacher, Christoph, 2008. "Does structure matter? The impact of switching the agricultural policy regime on farm structures," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 431-444, August.
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    5. R. Pace & Shuang Zhu, 2012. "Separable spatial modeling of spillovers and disturbances," Journal of Geographical Systems, Springer, vol. 14(1), pages 75-90, January.
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    8. Christoph R. Weiss, 1999. "Farm Growth and Survival: Econometric Evidence for Individual Farms in Upper Austria," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 103-116.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Agricultural and Food Policy;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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