Competition Effects on Technical Efficiency in Cattle Farms

Sammanfattning

This thesis investigates how competition influences technical inefficiency in the northernand north-western European cattle industry. By combining industrial organization theoryof competition and market structures with empirical literature on agricultural productionand a stochastic frontier analysis, we evaluate whether market concentration affects farms’productivity. We find that the concentration of a market in which cattle farms operatehas ambiguous effects on production. A fragmented market tends to be negative forproduction, but so does a highly concentrated one, suggesting that an intermediate levelof market concentration minimizes technical inefficiency. We also find that efficiencyis affected by farm size. This thesis bridges the gap between competition studies andefficiency analysis in an agricultural setting.