Technical efficiency and spatial spillovers: Evidence from grain marketing cooperatives in the US Midwest

Abstract

To date, no study has investigated the role of spatial spillovers in the technical efficiency of farmer cooperatives. This study addresses this issue by employing a two-stage approach, first measuring cooperatives' technical efficiency using a Data Envelopment Analysis (DEA) model and secondly using a bootstrap truncated regression to identify the effect of spatial spillovers and cooperative firm-level characteristics on technical efficiency. The empirical application focuses on grain marketing cooperatives in the Midwest region of the United States, and shows that spatial spillover effects influence the technical efficiency of neighboring cooperatives. Technical efficiency is also found to be influenced by several cooperative firm-level characteristics including age, liquidity, differentiation, and membership size. [EconLit citations C21, Q13, R3].