Estimating Production Risk and Inefficiency Simultaneously: An Application to Cotton Cropping Systems

Abstract

By using a stochastic frontier framework, the mutual effect of input use on production risk and inefficiency is investigated. Disentangling this mutual effect proves important for empirical reasons, at least when applied to west Tennessee cotton systems grown after various cover crops. The most striking result is that the stochastic frontier model, when compared with a typical Just-Pope model, reorders the relative riskiness of cover-crop regimes associated with the cotton systems.

Keywords

• cotton
• inefficiency
• just-pope
• production risk
• stochastic production frontier