Government Interventions, Market Imperfections, and Technical Inefficiency in a Mixed Economy: A Case Study of Indian Agriculture |
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Authors: | Anjana Bhattacharyya Arunava Bhattacharyya Subal C Kumbhakar |
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Institution: | aUniversity of Calcutta, Calcutta, 700027, India;bUniversity of Nevada, Reno, Nevada, 89557;cUniversity of Texas, Austin, Texas, 78712 |
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Abstract: | This paper uses an output-maximizing framework in the presence of expenditure constraint to measure output loss and input misallocation resulting from market distortions and technical inefficiency. A generalized indirect production function accommodating allocative distortions and technical inefficiency is used. Allocative distortions are captured in terms of effective (shadow) prices in which distortion parameters are both farm- and input-specific. The stochastic frontier approach is used to model technical inefficiency. Using farm-level data on 105 jute growers from West Bengal, India, we find that average output losses due to allocative distortions and technical inefficiency are 6.3% and 14%, respectively. |
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