Nonparametric productivity analyses have traditionally focused on the technological progress and the efficiency issues, while the question of scale and scope economies has attracted less attention. The reason is methodological: There is a considerable difficulty concerning the decomposition of the productivity index (e.g. Lovell, 2001), but also the estimation of scale and scope properties is often dictated by the restrictive convexity postulate (Kuosmanen, 2001). Consequently, the earlier research may have seriously underestimated the importance of scale and scope economies, and consequently, overemphasized the role of operational efficiency.
This project has both a theoretical/methodological and an applied dimension. Our aim is to develop nonparametric research techniques to account for economies of scale and of specialization. On the other hand, we apply the nonparametric methods to the extensive data set of Finnish farms to analyze both the economic and ecological impact of the scale and scope economies.
Dr. Timo Kuosmanen(Wageningen University, The Netherlands)
Mr. Timo Sipiläinen (Ph.D. student, University of Helsinki, Finland)
Available papers:
Kuosmanen, T., and T. Sipiläinen (2004): On the Anatomy of Productivity Growth: A Decomposition of the Fisher Ideal TFP Index, paper presented at the 4th International DEA Symposium, Birmingham, UK, September 2004.
Sipiläinen, T. (2003): Sources of productivity growth on Finnish dairy farms, paper presented at the 55th IAES conference, 12-16 March 2003, Vienna, Austria.