Agriculture Reference
In-Depth Information
standardised farming units, which is a measure of the income generating
capacity of the firm. Firm type is represented by two dummy variables
indicating firms specialised in vegetables and cut flowers, respectively (pot
plant firms are reference type).
The price ratio of energy and output is calculated from Törnqvist
price indices of output and energy with prices obtained from the LEI-
DLO/CBS. The price indexes vary over the years but not over the firms,
implying prices are exogenous from the perspective of the firm. The price
of output consists of prices of vegetables, fruits, pot-plants and flowers.
The price of energy consists of prices of gas, oil and electricity, as well as
delivery of thermal energy by electricity plants. A description of the data is
in Table 4.1.
5. RESULTS
Results of the Simulated Maximum Likelihood (SML) estimation of the
multinomial Probit model of energy saving options are found in Table 4.2.
The parameter estimates and t-values indicate that five out of eight
parameters in both choice equations are significant at the critical 5% level.
The parameter estimates are robust to both individual random effects and
serial correlation. Table 4.2 also indicates that the intercept of the equation
of standard with storage was fixed by the computer program due to poor
identification caused by including the dummy variables associated with
firm type. Parameter estimates of the matrices and are found in
Appendix A, showing that ten of the 16 parameters in and could be
identified during estimation. Keane (1993) also pointed out that it is
difficult to identify a large number of parameters numerically in these
matrices. Nevertheless, the error structure found in the and is
sufficiently general to control for individual effects and serial correlation of
the errors. The parameters in
and
are jointly significant at the critical
5% level.
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