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Stochastic Frontier and Technical Efficiency of Farms in Irrigated Areas of Pakistan's Punjab

Author

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  • Abid A. Burki

    (Department of Economics, Quaid-i-Azam University, Islamabad.)

  • Haq Nawaz Shah

    (Punjab Economic Research Institute, Lahore.)

Abstract

This paper presents new evidence on technical efficiency and its sources by examining the cost behaviour of 387 farms and whole-farm data from five irrigated districts of Punjab. Fitting translog variable cost frontier we find that technical inefficiency raises the cost of average sample farms by 24 percent that could have been saved had the farms been technically efficient. Our results enable us to conclude that farm efficiency is positively related to formal schooling of farm operators, abundance of canal water, and head reaches of mogha, and negatively to farm size, while the age of farm operators has no effect on efficiency.

Suggested Citation

  • Abid A. Burki & Haq Nawaz Shah, 1998. "Stochastic Frontier and Technical Efficiency of Farms in Irrigated Areas of Pakistan's Punjab," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(3), pages 275-291.
  • Handle: RePEc:pid:journl:v:37:y:1998:i:3:p:275-291
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    References listed on IDEAS

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    1. Greene, William H., 1982. "Maximum likelihood estimation of stochastic frontier production models," Journal of Econometrics, Elsevier, vol. 18(2), pages 285-289, February.
    2. Byerlee, Derek & Siddiq, Akmal, 1994. "Has the green revolution been sustained? The quantitative impact of the seed-fertilizer revolution in Pakistan revisited," World Development, Elsevier, vol. 22(9), pages 1345-1361, September.
    3. Fare,Rolf & Grosskopf,Shawna & Lovell,C. A. Knox, 2008. "Production Frontiers," Cambridge Books, Cambridge University Press, number 9780521072069, September.
    4. George E. Battese & Sohail J. Malik & Sumiter Broca, 1993. "Production Functions for Wheat Farmers in Selected Districts of Pakistan: An Application of a Stochastic Frontier Production Function with Time-varying Inefficiency Effects," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(3), pages 233-268.
    5. Bravo-Ureta, Boris E. & Pinheiro, António E., 1993. "Efficiency Analysis of Developing Country Agriculture: A Review of the Frontier Function Literature," Agricultural and Resource Economics Review, Cambridge University Press, vol. 22(1), pages 88-101, April.
    6. Burki, Abid A. & Terrell, Dek, 1998. "Measuring production efficiency of small firms in Pakistan," World Development, Elsevier, vol. 26(1), pages 155-169, January.
    7. A. Parikh & K. Shah, 1994. "Measurement Of Technical Efficiency In The North‐West Frontier Province Of Pakistan," Journal of Agricultural Economics, Wiley Blackwell, vol. 45(1), pages 132-138, January.
    8. Cornwell, C. & Schmidt, P., 1993. "Production Frontiers and Efficiency Measurement," Papers 427e, Georgia - College of Business Administration, Department of Economics.
    9. Panda, Rajkishor, 1986. "Anomaly in the Use of Water in a Canal Irrigation System - A Case Study," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 41(4), October.
    10. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    11. Phillips, Joseph M, 1994. "Farmer Education and Farmer Efficiency: A Meta-Analysis," Economic Development and Cultural Change, University of Chicago Press, vol. 43(1), pages 149-165, October.
    12. Azhar, Rauf A, 1991. "Education and Technical Efficiency during the Green Revolution in Pakistan," Economic Development and Cultural Change, University of Chicago Press, vol. 39(3), pages 651-665, April.
    13. Bauer, Paul W., 1990. "Recent developments in the econometric estimation of frontiers," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 39-56.
    14. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
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    Cited by:

    1. Karunarathna, Muditha & Wilson, Clevo, 2017. "Agricultural biodiversity and farm level technical efficiency: An empirical investigation," Journal of Forest Economics, Elsevier, vol. 29(PA), pages 38-46.
    2. Umar Farooq & Trevor Young & Noel Russell & Muhammad Iqbal, 2001. "The supply response of basmati rice growers in Punjab, Pakistan: price and non-price determinants," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(2), pages 227-237.

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