Technical efficiency and firm exit in the wine and meat sector: policy implications
New Medit, vol 9, n.2, (June 2010), pp. 25-31
Jel classification: Q180, L660
Our paper seeks to assess the determinant factors that drive wine and meat industries in Catalonia (Spain) to abandon their activities as well the timing of their decision. More specifically, we use Duration Analysis (DA) to determine why firms exit the market and the diffusion aspects of abandoning behaviour. Economic and non-economic factors were used as explanatory variables, especially, the Technical Efficiency (TE) ratio that has been assessed by the Stochastic Frontier (SF) model. Results demonstrate a significant impact of TE as well as other economic factors on exit duration. Policy makers will be more able to target those agro-industries with higher hazard of abandoning market and thus maintain their contribution to the social fabric associated to them.
market exit, stochastic frontier, duration analysis, wine and meat industries