Adamie, Birhanu Addisu
- Department of Economics, Swedish University of Agricultural Sciences
Abstract
We argue that inefficiency can be part of a strategic self-repositioning adjustment process beyond the general interpretation of poor performance. Based on the rational inefficiency hypothesis, we examine the simultaneous dynamics of efficiency and animal welfare improving investments over time in dairy farms. Using rotating panel data from Swedish dairy farms and implementing multidirectional efficiency analysis and Markov transitional dynamic analysis, the paper provides evidence that for some farms inefficiency is temporary and part of rational decision along their trajectory towards multi-efficiency (high efficiency-high animal welfare). The findings show the importance of time dynamics in efficiency achievements with implications to cross-sectional view.
Keywords
rational inefficiency; Markov transitional dynamics; dairy farming; multidirectional efficiency analysis
Published in
European Review of Agricultural Economics
2022, volume: 49, number: 2, pages: 433-471
SLU Authors
Hansson, Helena
- Department of Economics, Swedish University of Agricultural Sciences
- Department of Economics, Swedish University of Agricultural Sciences
UKÄ Subject classification
Economics
Publication identifier
- DOI: https://doi.org/10.1093/erae/jbaa034
Permanent link to this page (URI)
https://res.slu.se/id/publ/111251