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Abstract
The purpose of this paper is to analyze the cost efficiency of dairy farms in Japan.
The overall cost efficiency measure is decomposed into two components (Fare and
Grosskopf, 1985): (1) the weak cost efficiency measure; (2) the scale efficiency
measure. Linear programming techniques are used in calculating the efficiency
measures for a sample of dairy farms in Japan during the year 1989. The study
demonstrates an overall cost inefficiency, which is not due to scale inefficiency, but
rather to weak cost inefficiency.