This paper analyzes the effects of returns to scale, farm-size, technical, allocative, and scale inefficiencies on the profitability of Utah dairy farms. It derives the conditions necessary to compare the profitability of farms within and between different size classifications as small, medium, and large. Some comparative static results regarding increases in input prices and a decrease or withdrawal of price support on profitability of small, medium, and large farms are presented. Copyright 1993 by MIT Press.

Subal C. Kumbhakar, Arunava Bhattacharyya, Price Distortions and Resource-Use Efficiency in Indian Agriculture: A Restricted Profit Function Approach, The Review of Economics and Statistics, Vol. 74, No. 2 (May, 1992), pp. 231-239

Subal C. Kumbhakar, Basudeb Biswas, DeeVon Bailey, A Study of Economic Efficiency of Utah Dairy Farmers: A System Approach, The Review of Economics and Statistics, Vol. 71, No. 4 (Nov., 1989), pp. 595-604

In light of the ongoing restructuring of the European banking industry and the challenging macroeconomic environment, banks have increased their efforts to reduce operating costs. Yet, the institutional features that affect banks’ ability to adjust costs and in particular personnel expenses, which comprise a significant part of banks’ non-interest cost structure, have not been adequately studied. This paper investigates the effect of labour market institutions and regulations on bank performance in 15 European countries over the period 2005–2010, using the Fraser index for labour regulation and its disaggregated sub-components. We propose a novel methodology to measure performance, based on the seminal work of Kumbhakar and Tsionas (2005), which allows the estimation of technical and allocative efficiency and the examination of the effect of labour market regulations in a single stage. Results indicate the existence of a positive relationship between the liberalisation of EU labour markets and allocative efficiency, while the effect on technical efficiency appears to be negative, although not statistically significant. When looking at the disaggregated components of the labour index, we further confirm that different forces are at play.

We propose the use of stochastic frontier approach to modelling financial constraints of firms. The main advantage of the stochastic frontier approach over the stylised approaches that use pooled OLS or fixed effects panel regression models is that we can not only decide whether or not the average firm is financially constrained, but also estimate a measure of the degree of the constraint for each firm and for each time period, and also the marginal impact of firm characteristics on this measure. We then apply the stochastic frontier approach to a panel of Indian manufacturing firms, for the 1997–2006 period. In our application, we highlight and discuss the aforementioned advantages, while also demonstrating that the stochastic frontier approach generates regression estimates that are consistent with the stylised intuition found in the literature on financial constraint and the wider literature on the Indian credit/capital market.