Efficiency measures for retail fertilizer dealers

• Published in: Agribusiness (New York, N.Y.) N.Y.), 1997-09, Vol.13 (5), p.497-509
• Main Authors: Preckel, P.V, Akridge, J.T, Boland, M.A
• Format: Article
• Language: English
• Subjects: ABONOS; Agricultural economics; Agricultural production; CARGAS VARIABLES; CHARGE VARIABLE; COMPARISONS; Cost control; DESCRIPTIVE STATISTICS; DIMENSION; DIMENSIONS; EFFICACITE; EFFICIENCY; EFICACIA; ENGRAIS; ENSAYO; EQUATIONS; FERTILIZERS; Hypotheses; ILLINOIS; INDIANA; INPUT PRICES; LINEAR PROGRAMMING; MATEMATICAS; Mathematical models; MATHEMATICS; MATHEMATIQUE; METHODE STATISTIQUE; METODOS ESTADISTICOS; OUTTURN; PRECIOS; PRICES; PRIX; Profit maximization; PROFITABILITY; Profits; PROGRAMACION LINEAL; PROGRAMMATION LINEAIRE; RENDEMENT; RENDIMIENTO; RENTABILIDAD; RENTABILITE; RETAIL MARKETING; Retail stores; RETURNS; SIZE; Statistical analysis; STATISTICAL METHODS; Studies; TESTAGE; TESTING; VARIABLE COSTS; Variables; VENTA AL POR MENOR; VENTE AU DETAIL; YIELDS
• ISSN: 0742-4477; 1520-6297
• DOI: 10.1002/(SICI)1520-6297(199709/10)13:5<497::AID-AGR4>3.0.CO;2-1

An application of tests of economically rational behavior by fertilizer retailers is presented. Tests are developed to measure efficiency of variable cost minimization, revenue maximization, and profit maximization. These tests include standard linear programming-based nonparametric efficiency tests and simpler but less conclusive tests which are performed using only simple arithmetic. Results indicate that fertilizer retailers act as variable cost minimizers, but not as revenue and profit maximizers. Additional tests isolate whether inefficiency in cost minimization is due to a perception of variable input fixity. Management can then take steps to focus efforts on input control