Econometric estimation of investment utilization, adjustment costs, and technical efficiency in Danish pig farms using hyperbolic distance functions

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearch

Based on a theoretical microeconomic model, we econometrically estimate investment utilization, adjustment costs, and technical efficiency in Danish pig farms based on a large unbalanced panel dataset. As our theoretical model indicates that adjustment costs are caused both by increased inputs and by reduced outputs, we estimate hyperbolic distance functions that account for reduced technical efficiency both in terms of increased inputs and reduced outputs. We estimate these hyperbolic distance functions as “efficiency effect frontiers” with the Translog functional form and a dynamic specification of investment activities by the maximum likelihood method so that we can estimate the adjustment costs that occur in the year of the investment and the three following years. Our results show that investments are associated with significant adjustment costs, especially in the year in which the investment was made. The highest investment utilization is two years after the investment.
Original languageEnglish
Title of host publicationSymposium i anvendt statistik 2014
EditorsPeter Linde
Number of pages10
Place of PublicationKøbenhavn
PublisherDanmarks Statistik
Publication date2014
Pages42-51
ISBN (Print)978-87-501-2111-4
Publication statusPublished - 2014
EventSymposium i Anvendt Statistik - København, Denmark
Duration: 27 Jan 201429 Jan 2014

Workshop

WorkshopSymposium i Anvendt Statistik
LandDenmark
ByKøbenhavn
Periode27/01/201429/01/2014
SeriesSymposium i anvendt statistik
Volume2014

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