TY - JOUR
T1 - The empirical identification of heterogeneous technologies and technical change
AU - Sauer, Johannes
AU - Morrison Paul, Catherine J.
N1 - Funding Information:
This research commenced when J. Sauer was a visiting scholar in the ARE Department at UC Davis. Funding for this research was provided by the British Academy (SG-48134). The authors are grateful to Landscentret, Skejby, Denmark, for making the data available. We thank numerous colleagues for comments on an earlier version of this study, including A. Alvarez, E. Diewert, K. Frohberg and L. Orea.
PY - 2013/4
Y1 - 2013/4
N2 - When different technologies are present in an industry, we assume that a homogeneous technology will lead to misleading implications about technical change and inefficient policy recommendations. In this article a latent class modelling approach and flexible estimation of the production structure is used to distinguish different technologies for a representative sample of EU dairy producers, as an industry exhibiting significant structural changes and differences in production systems in the past decades. The model uses a transformation function to recognize multiple outputs; separate technological classes based on multiple characteristics, a flexible generalized linear functional form, a variety of inputs and random effects to capture firm heterogeneity; and measures of first- and second-order elasticities to represent technical change and biases. We find that if multiple production frontiers are embodied in the data, different firms exhibit different output or input intensities and changes associated with different production systems that are veiled by overall (average) measures. In particular, we find that farms that are larger and more capital intensive experience greater productivity, technical progress and labour savings, and enjoy scale economies that have increased over time.
AB - When different technologies are present in an industry, we assume that a homogeneous technology will lead to misleading implications about technical change and inefficient policy recommendations. In this article a latent class modelling approach and flexible estimation of the production structure is used to distinguish different technologies for a representative sample of EU dairy producers, as an industry exhibiting significant structural changes and differences in production systems in the past decades. The model uses a transformation function to recognize multiple outputs; separate technological classes based on multiple characteristics, a flexible generalized linear functional form, a variety of inputs and random effects to capture firm heterogeneity; and measures of first- and second-order elasticities to represent technical change and biases. We find that if multiple production frontiers are embodied in the data, different firms exhibit different output or input intensities and changes associated with different production systems that are veiled by overall (average) measures. In particular, we find that farms that are larger and more capital intensive experience greater productivity, technical progress and labour savings, and enjoy scale economies that have increased over time.
KW - O12
KW - O33
KW - heterogeneous technologies
KW - localized technical change
KW - productivity
KW - transformation function
UR - http://www.scopus.com/inward/record.url?scp=84855471950&partnerID=8YFLogxK
U2 - 10.1080/00036846.2011.617704
DO - 10.1080/00036846.2011.617704
M3 - Article
AN - SCOPUS:84855471950
SN - 0003-6846
VL - 45
SP - 1461
EP - 1479
JO - Applied Economics
JF - Applied Economics
IS - 11
ER -