Technical Efficiency and Producers’ Individual Technology: Accounting for Within and Between Regional Farm Heterogeneity

Wang, X. and Hockmann, H. and Bai, J. (2012) Technical Efficiency and Producers’ Individual Technology: Accounting for Within and Between Regional Farm Heterogeneity. Canadian Journal of Agricultural Economics, 60 (4). pp. 561-576.

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Differences in resource endowment between regions influence the technologies applied in agriculture and cause location-specific effects on production and technical change. Access to technologies may also differ within regions because producers may apply different technologies in production due to different characteristics. Within this setting, we extend the existing literature by considering that producers face region- and farm-specific production frontiers. The treatment of essentially heterogeneous technical efficiency (TE) is performed following a two-step procedure. First, a random coefficient specification of the production technology is used to measure the interactions of technology adoption with time, input factors, and output. Second, linear programming techniques are employed to envelop the optimal level of technology. This procedure is applied to household-level data from eastern, central, and western provinces in China. Our results provide evidence that TE is significantly affected by farm heterogeneity. This factor influences TE directly as a producer-specific input, and indirectly through interaction with observable inputs such as land, labor, capital, and intermediate inputs. Our results also prove the assumption that farming technology exhibits region-specific characteristics. Furthermore, there is a disparity of TE across provinces that narrows over the study period and is driven by the shifts of production to the metafrontier.

Item Type: Article
Additional Information: We gratefully acknowledge the financial support by China Agriculture Research System, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), and National Science Foundation of China (Grant: 71073155 and 71173204). Usual disclaimer applies.
Uncontrolled Keywords: Heterogeneity, production technology, database, natural resource, time-varying technology.
Author Affiliation: Center for Chinese Agricultural Policy, Institute for Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences, Jia 11, Datun Road, Anwai, Beijing, 100101 China.
Subjects: Social Sciences > Agricultural Extension,Technology, ICT
Divisions: General
Depositing User: Mr Balakrishna Garadasu
Date Deposited: 26 Feb 2013 09:49
Last Modified: 26 Feb 2013 09:49
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