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Abstract This paper presents a stochastic efficiency decomposition model based on Kopp and Diewert's deterministic methodology. The stochastic model is used to analyze technical, economic, and allocative efficiency for a sample of New England dairy farms. The results suggest that mean economic efficiency for the farmers in the sample is about 70% and that, on average, there is little difference between technical (83.0%) and allocative (84.6%) efficiency. Analyses of the relationship between efficiency and four socioeconomic variables—farm size, education, extension, and experience—reveal that, despite some statistically significant associations, efficiency levels are not markedly affected by these variables.
Bravo‐Ureta et al. (Wed,) studied this question.