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Measurement of Economic Efficiency in Pakistani Agriculture

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  • Ashok Parikh
  • Farman Ali
  • Mir Kalan Shah

Abstract

The behavioral and stochastic cost frontier functions are applied to estimate cost inefficiency by farms. The behavioral approach satisfies most of the assumptions of dual cost function and the likelihood ratio test rejects the market efficiency hypothesis implying less than optimum use of manures, labor, and fertilizers. A suboptimal use is explained by holding size, education, credit, and subsistence needs. Small farms seem to be more efficient than large farms in the region. A measure of inefficiency based on a stochastic cost frontier approach confirms the results of the behavioral approach.

Suggested Citation

  • Ashok Parikh & Farman Ali & Mir Kalan Shah, 1995. "Measurement of Economic Efficiency in Pakistani Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 675-685.
  • Handle: RePEc:oup:ajagec:v:77:y:1995:i:3:p:675-685.
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    File URL: http://hdl.handle.net/10.2307/1243234
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