Interlinked Factor Markets and Allocative Efficiency: Evidence from Rural West Bengal, India
Arindam Laha and
Pravat Kuri Additional contact information Arindam Laha: Department of Commerce, the University of Burdwan, India
Pravat Kuri: Department of Economics, the University of Burdwan, India
The issue of the implication of interlinkage of factor markets on the allocative efficiency level of the farm households deserves a special attention in the light of the controversy among two distinct schools of thought: the Neoclassical and the Marxist. An attempt has been made in the paper to measure allocative and cost efficiencies of the interlinked holding vis-à-vis a comparable group of non-interlinked holding in the framework of Data Envelopment Analysis. Empirical evidence establishes the Neo-classical proposition that interlinked factor markets can be considered as one of the “efficiency improving institutional change” in rural agrarian economy.