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Agglomeration Effects in Ontario's Dairy Farming
Author(s) -
Hailu Getu,
James Deaton B.
Publication year - 2016
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aaw041
Subject(s) - inefficiency , economies of agglomeration , agriculture , production (economics) , heteroscedasticity , dairy farming , agricultural economics , economics , function (biology) , agricultural science , business , microeconomics , econometrics , geography , environmental science , archaeology , evolutionary biology , biology
This paper examines the agglomeration hypothesis, which states that a firm's productive efficiency is increased by closer proximity to other firms. Using a stochastic input distant function with heteroskedastic inefficiency effects, we find that the density of Ontario dairy farms has a significant positive economic effect on production efficiency. The finding has implications for understanding agricultural firm location and farmer‐led efforts to preserve agricultural farming activities in specific locations.