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Nature of the Farm: Revisited

  • Matthew Elliott and Harvey S. James

Abstract

We empirically test separation of ownership and control (SOC) and the interaction of SOC with farmer effort on farm success using data from the U.S. Department of Agriculture's Agricultural Resource Management Survey. We use a two-stage least-squares approach with instrumental variables that proxy for participation constraints in binding incentive contracts. We find that the interaction has a significantly positive effect on success for grain farms and an insignificant effect for livestock farms. The results are consistent with hypotheses by Allen and Lueck (1998), but our model predicts that farms with SOC are likely to be more successful than farms without SOC despite exogenous uncertainty and agency costs.

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Copyright

This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.

Corresponding author

Correspondence: Matthew Elliott ■ Department of EconomicsSouth Dakota State University108 Scobey Hall, Box 0504Brookings, SD 57007 ■ Phone 605.688.4866 ■ Email matthew.elliott@sdstate.edu.

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The views expressed are the authors’ and do not necessarily represent the policies or views of any sponsoring agencies.

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References

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Nature of the Farm: Revisited

  • Matthew Elliott and Harvey S. James

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