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Multiple-Output Production With Undesirable Outputs: An Application to Nitrogen Surplus in Agriculture

Author

Listed:
  • Carmen Fernandez

    (University of St.Andrews)

  • Gary Koop

    (University of Glasgow)

  • Mark F.J. Steel

    (University of Kent at Canterbury)

Abstract

Many production processes yield both good outputs and undesirable ones (e.g. pollutants). In this paper, we develop a generalization of a stochastic frontier model which is appropriate for such technologies. We discuss efficiency analysis and, in particular, define technical and environmental efficiency in the context of our model. Methods for carrying out Bayesian inference are developed and applied to a panel data set of Dutch dairy farms, where excess nitrogen production constitutes an important environmental problem.

Suggested Citation

  • Carmen Fernandez & Gary Koop & Mark F.J. Steel, 2002. "Multiple-Output Production With Undesirable Outputs: An Application to Nitrogen Surplus in Agriculture," Econometrics 0201001, University Library of Munich, Germany, revised 06 Jan 2002.
    • Handle: RePEc:wpa:wuwpem:0201001
    Note: Type of Document - Tex (plain); prepared on IBM PC - PC-TEX; to print on HP/PostScript (A4); pages: 27 ; figures: included. Forthcoming in Journal of the American Statistical Association (Applications and Case Studies)
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    Keywords

    Dairy farm; Efficiency; Environment; Longitudinal data; Stochastic frontier;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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