Measuring the impacts of production risk on technical efficiency: A state-contingent conditional order-m approach

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Abstract

This article studies the influence of risk on farms' technical efficiency levels. The analysis extends the order-m efficiency scores approach proposed by Daraio and Simar (2005) to the state-contingent framework. The empirical application focuses on cross section data of Catalan specialized crop farms from the year 2011. Results suggest that accounting for production risks increases the technical performance. A 10% increase in output risk will result in a 2.5% increase in average firm technical performance. © 2014 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)237-242
JournalEuropean Journal of Operational Research
Volume239
Issue number1
DOIs
Publication statusPublished - 2014

Keywords

  • nonparametric frontier models
  • cheap talk
  • technologies
  • uncertainty
  • inference
  • corn

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