Journal of Productivity Analysis

, Volume 45, Issue 1, pp 103–115 | Cite as

Efficiency and regulation: a comparison of dairy farms in Ontario and New York State



We study the cost efficiency of dairy farms operating under two different regulatory regimes. While neo-classical economic theory suggests that farms should maximize their efficiency regardless of their regulatory system, we find that farms operating in a more regulated environment have, on average, a lower cost efficiency. Differences in cost efficiency are primarily explained by allocative decisions—farms in the more regulated environment are overcapitalized and overly reliant on homegrown feed. Efficiency is estimated using bootstrapped data envelopment analysis and a stochastic distance function. We discuss the implications of these results for welfare and policy.


Regulation Efficiency Agricultural policy Data envelopment analysis Bootstrap Distance function 

JEL Classification

L51 D21 Q18 



This work was supported by the Ontario Ministry of Agriculture, Food and Rural Affairs [grant number 200222] and the Canadian Dairy Commission.


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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.University of SaskatchewanSaskatoonCanada
  2. 2.University of GuelphGuelphCanada

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