Document Type : Original Article
Authors
1
PhD Student, Department of Agricultural Economics, Agricultural Policy and Development, Roudehen Branch, Islamic Azad University, Roudehen, Iran
2
Department of Agricultural Economics, Agricultural Policy and Development, Ro.C., Islamic Azad University, Roudehen, Iran
3
Department of Plant Genetics and Breeding, Roudehen Branch, Islamic Azad University, Roudehen, Iran
10.220.34.2023.46
Abstract
In conventional stochastic frontier (SF) models, the inefficiency term is assumed to be constant over time; however, in reality, inefficiency is time-dependent due to policy changes. Another issue with standard SF models is that when panel data and cross-sectional heterogeneity are utilized, fixed and random effects are confounded with the inefficiency term and are not adequately accounted for in the model, resulting in the inefficiency term being estimated as bias. Therefore, the objective of this paper is to address these two issues in estimating the stochastic production function for red meat across Iranian provinces. Specifically, the cross-sectional units comprise 32 Iranian provinces, and the corresponding time series cover annual data from 2004 to 2021. The True Random Effects (TRE) model is estimated and compared with previous models that suffered from these two issues, and its superiority is confirmed through the Wald test. The three most efficient provinces in terms of red meat production are Ilam, Kurdistan, and Kerman, respectively, while the three least efficient provinces are Khorasan Razavi, Golestan, and Tehran. The provinces that have experienced a continuous decrease in red meat distribution inefficiency include Khuzestan, Zanjan, Sistan and Baluchestan, East Azerbaijan, Alborz, Isfahan, Bushehr, Tehran, and North Khorasan. Conversely, several provinces, including Semnan and Chaharmahal and Bakhtiari, have exhibited an increasing trend in inefficiency.
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