Romanian Maize - Distorted Prices and Producer Efficiency
This study tackles the decomposition of efficiency with respect to agricultural production in transition economies by using a case study on small scale maize farmers in Romania. The underlying modelling assumption is that farmers in transition countries still face heavily distorted price systems. To capture such distortions a stochastic shadow cost frontier model is formulated to investigate the systematic input specific allocative inefficiency. We further adjust the underlying cost frontier by incorporating shadow price corrections and subsequently reveal evidence on farm specific technical inefficiency. Different models are estimated due to the imposition of curvature correctness. The empirical results confirm the underlying hypothesis of enduring price distortions.
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