Technical Efficiency With an Undesirable Output - Case Study of Czech Dairy Farms
The paper deals with the technical efficiency of Czech dairy farms with respect to the production of an
undesirable output, namely greenhouse gas emission. The analysis is based on FADN data representing the period 2004-
2011. The technical efficiency is estimated by SFA. The translog ODF is specified in the fixed management model and
estimated by the simulated likelihood method. The results show that consideration of undesirable output to ODF has no
significant effect on technical efficiency. Dairy farms exploited their production possibilities to 88.6 %. Specialization,
extensification, and localization in LFA have a negative effect on the technical efficiency score of dairy farms.
Key words- Technical efficiency; stochastic frontier analysis; dairy; Czech Republic; undesirable output