Modeling heterogeneous technologies in the presence of sample selection: The case of dairy farms and the adoption of agri‐environmental schemes in France

In this article, we assess farms’ technical efficiency accounting for their production heterogeneity and correcting the potential endogeneity associated with adoption of Common Agricultural Policy (CAP) agri-environmental schemes (AESs). We estimate a first-step selection probit model. second step latent class stochastic frontier model (LCSFM) separately on each two sub-samples, AESs adopters non-adopters. also account heteroscedasticity in estimation inefficiency effects LCSFM within sub-sample. The application is to Farm Accountancy Data Network (FADN) dairy farms France during 2002–2016. identify one intensive technology extensive sub-samples. investigation shows that modeling could help better target CAP, since relationship between operational subsidies farms' differs depending whether or not accounted for.