Global Advanced Research Journal of Agricultural Science (GARJAS) ISSN: 2315-5094
April 2019 Vol. 8(4): pp. 151-158
Copyright © 2019 Global Advanced Research Journals
Full Length Research Paper
Profit persistence examination in the Hungarian agriculture
Tibor Bareith
Assistant lecturer at Department of Finance and Economics, Kaposvár University, Kaposvár, Hungary and
PhD Student at Pallas Athene Domus Education is Foundation, Budapest, Hungary H-7400, Kaposvár, Guba Sándor str. 40.
.*Corresponding Author's Email: mbareith.tibor@ke.hu
Accepted 26 February, 2019
Abstract
In this study I examine the profit persistence of the entire Hungarian agriculture with dynamic panel GMM estimation. The estimated profit persistence is low (close to zero) but is significant. There are many small farmers in Hungary; this market structure is closest to the perfect competition where the abnormal profit is zero. Based on the model, companies with a fast growth rate can gain abnormal profits. Persistence is mostly reduced by the share of subsidies received, i.e. non-refundable subsidies compensate for market competition and direct economies towards equilibrium profit. Taking short and long-term risk has a negative impact on profit persistence.
Keywords: abnormal profit, profit persistence, firm performance, agriculture
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