Rationalising inefficiency in dairy production: evidence from an over-time approach
Addisu Adamie, Birhanu; Hansson, HelenaAbstract
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 analysisPublished in
European Review of Agricultural Economics2022, volume: 49, number: 2, pages: 433-471
Authors' information
UKÄ Subject classification
Economics
Publication Identifiers
DOI: https://doi.org/10.1093/erae/jbaa034
URI (permanent link to this page)
https://res.slu.se/id/publ/111251