Truncated Regression

The study estimated the input-specific technical inefficiency among Dutch indoor vegetable farms for the period 2006–2016 and identified the sources of inefficiencies for the specified inputs.

Our objective was to empirically quantify the effects of spatial spillovers on outputand input-specific technical inefficiency in Dutch arable crop farms. First, a non-para-metric directional distance function was computed using DEA to estimate technicaland scale inefficiency scores for output, productive inputs and damage abatement inputs (pest control spending). Second, a spatial econometric model was estimated which incorporates regressors for spatial lags of farm characteristics alongside other non-lagged explanatory variables and time-period fixed effects. We use both the inverse distance weight matrix and the binary k-nearest-neighbours weight matrix and also estimate the distance cut-off and the optimal number of neighbours rather than imposing rules of thumb.