Production Technical Efficiency Research Articles

Production technology, elasticity of substitution and technical efficiency of the handloom textile industry of Bangladesh

A number of translog and Cobb-Douglas frontier production models were estimated for the Bangladesh handloom textile industry to investigate its production technology and technical efficiency in production. It was found that the technical efficiency of the industry in producing cloth was only 41%. It was concluded that the industry might improve its technical efficiency by increasing its male/female labour ratio and yarn/capital ratio and decreasing its hired/family labour ratio and labour/capital ratio. The production technology of the industry was found to be characterized by a linearly homogeneous Cobb-Douglas function. The elasticity of substitution between labour and capital for the industry was found to be unity.

International trade and industrial organization: Problems, solved and unsolved

This survey reviews recent contributions to the interface between international trade and industrial organization. Import competition places a substantial limit on domestic market power. In the short run, competitive conditions can influence the speed and efficiency of a domestic market's adjustment to international disturbances. Exports' effects on competition among national sellers are unclear and depend on the scope for price discrimination. Models of trade with monopolistic competition explain intra-industry trade and also the widely observed sensitivity of firm size to market size. Exposure to trade also increases the technical efficiency of production. Diverse policy issues turn on the distinction between national and global welfare and the scope for commitment.

Resource Allocation and Use Under Collective Rights and Labour Management in Peruvian Coastal Agriculture

A critical issue in the evaluation of labour management as a development policy is its impact on production. In an effort to contribute to that evaluation and to the economics of labour management, this study analyses production data collected from cooperative firms established by the Peruvian agrarian reform. The data present an unusual opportunity for careful microeconomic analysis of the reform itself, as well as an opportunity to confront and refine existing propositions about the effects of the collective property rights of labour management on production. Property rights may affect production because of their effort on incentives for conventional resource allocation decisions. They may also affect intrafirm principal-agent decisions which determine the intensity with which given resources are utilised. Beginning with Ward's (I 958) paper, a number of theoretical studies have compared labour-managed and capitalist resource allocation, and an approximate consensus has emerged about conditions under which differences occur. In this study, measures of the allocative behaviour of Peruvian firms are estimated and compared with the theoretically expected behaviour of both capitalist and peasant agricultural producers. The impact of collective ownership on the intensity of resource utilisation (i.e. technical efficiency of the observable production function) arouses greater theoretical dispute than the resource allocation question. A collective assignment of property rights may weaken supervisory authority which can control 'free rider' externality problems within the production process. On the other hand, participation of labour in management may foster cooperative attitudes and other social control devices which can fulfill the same functions as hierarchical supervision. Existing literature offers the competing hypotheses that labour management leads either to a breakdown in intrafirm coordination and the observable technical efficiency of production (as Jensen and Meckling (I 979) claim), or to an improvement (as Vanek (i 969) claims). The results of the present paper do not unequivocably support either view. Instead, they portray a diversity in labour-managed production performance, and suggest the importance of policy and institutional factors which condition the impact of labour management on production. The results also provide a

Estimating Production Technical Efficiency for Individual Farms in Tennessee

Estimating Production Technical Efficiency for Individual Farms in Tennessee

Measuring the technical efficiency of production: A comment

Measuring the technical efficiency of production: A comment

Measuring the technical efficiency of production: Reply

Measuring the technical efficiency of production: Reply

Education and Technical Efficiency in Small-Farm Production

Differences in technical efficiency are observed as differences in the physical output produced from a given bundle of physical inputs. These differences are not considered in the traditional theory of the firm, wherein the output resulting from a particular input bundle is specified as the maximum possible according to the latest technology. Presupposing technical efficiency, the theory of the firm concentrates on allocative efficiency-on the choice of the particular input bundle that maximizes profit, given prices and the technically efficient production function. "The best utilization of any particular input combination," according to Henderson and Quandt, "is a technical, not an economic problem."1 Economic theory notwithstanding, empirical studies of production must take into account differences in the utilization of inputs since, in the real world, producers are not all equally efficient. It is conceptually convenient to divide the output variation observed over a number of firms into two parts, one that stems from variation in physical inputs and another that reflects differences in technical efficiency. Timmer has developed an approach by which to compare the technical efficiency of firms. Using linear programming, he determines the function that relates physical inputs to output for the most efficient of a sample of firms; in other words, he finds the production surface that is the envelope of all the observation points. He calls this function "the technical frontier." The relative tech-

Measuring the technical efficiency of production

Production technology is commonly modelled by means of a production function, which in the scalar output case specifies the maximum output obtainable from an input vector. The degree to which the actual output of a production unit approaches its maximum is called the technical efficiency of production. A technically efficient unit must operate on its production function, although this condition is not sufficient; a technically inefficient unit may operate beneath its production function, although this condition is not necessary. If the notion of technical efficiency is to have empirical content, it must be based on a proper measure, or index, of the technical efficiency of a production unit. It is the purpose of this paper to specify a set of properties such an efficiency measure should satisfy, to show that the widely used measure proposed by Farrell [4] does not satisfy these properties, and to introduce a new measure that does satisfy these properties. The pioneering work on technical efficiency is that of Farrell. Inspired by the work of Debreu [2] and Koopmans [7], Farrell suggested a measure of technical efficiency that can be interpreted, somewhat loosely for the moment, in either of two ways: as the ratio of technically minimal to actual inputs, given output and the input mix, or as the ratio of actual to technically