TECHNICAL EFFICIENCY MEASURES FOR DAIRY FARMS USING PANEL-DATA - A COMPARISON OF ALTERNATIVE MODEL SPECIFICATIONS

This article examines the impact of fixed effects production functions vis-a-vis stochastic production frontiers on technical efficiency mea sures. An unbalanced panel consisting of 96 Vermont dairy farmers for the 1971-1984 period was used in the analysis. The models examined inc orporated both time-variant and time-invariant technical efficiency. T he major source of variation in efficiency levels across models stemme d from the assumption made concerning the distribution of !he one-side d term in the stochastic frontiers. In general, the fixed effects tech nique was found superior to the stochastic production frontier methodo logy. Despite the fact that the results of various statistical tests r evealed the superiority of some specifications over others, the overal l conclusion of the study is that the efficiency analysis was fairly c onsistent throughout all the models considered.