Generalized maximum entropy cost allocation estimation Tobit formulation Cross Entropy
Rui Fragoso & Maria Leonor da Silva Carvalho (2013): “Estimation of cost allocation coefficients at the farm level using an entropy approach”, Journal of Applied Statistics, 40:9, 1893-1906, DOI:10.1080/02664763.2013.799127
This paper aims to estimate the farm cost allocation coefficients from whole farm input costs. An entropy approach was developed under a Tobit formulation and was applied to a sample of farms from the 2004 FADN data base for Alentejo region, Southern Portugal. A Generalized Maximum Entropy model and Cross Generalized Entropy model were developed to the sample conditions and were tested. Model results were assessed in terms of their precision and estimation power and were compared with observed data. The entropy approach showed to be a flexible and valid tool to estimate incomplete information, namely regarding farm costs.