Subsidies, Endogenous Technical Efficiency and the Measurement of Productivity Growth

Lassaad Lachaal

Journal of Agricultural and Applied Economics, 1994, vol. 26, issue 1, 299-310

Abstract: The impacts of program subsidy on productivity growth is investigated in this study. Mundlak's concept of endogeneity is applied to technical efficiency and generalized within a dual framework. Technology is described by an aggregate cost function while technical efficiency is conditional on a vector of state variables. Empirical evidence from the U.S. dairy sector supports the hypothesis that protectionism, in the form of program subsidy, is the source of considerable technical inefficiencies.

Date: 1994
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