Technology and efficiency in a panel of Italian dairy farms: an SGM restricted cost function approach
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This article employs a short-term specification of the symmetric generalised McFadden (SGM) cost function capable of
accommodating quasi-fixed factors and variable returns. Temporary equilibrium and scale economies are investigated while
maintaining the consistency of the estimated model with microeconomic theory and approximation properties. It also makes
use of a two-step procedure to estimate first the technology parameters and then time-varying efficiency at farm level. No
distributional assumptions are required on efficiency as we consider a fixed effect model. A balanced panel of Italian dairy
farms during the years from 1980 to 1992 serves as the case study. The results suggest a rigid productive structure during the
pre- and post-quota period. Moreover, Italian milk producers are found to exhibit considerable excess capacity and rather low
input technical efficiency.
© 2003 Elsevier B.V. All rights reserved.