Efficiency of Resource Allocation and Factor Market Lnterlinkage in West Bengal, India - a Data Envelopment Analysis Approach

Abstract

Efficiency in resource allocation has a far-reaching impact on the observed level of agricultural output. The paper measures allocative efficiency of farmer households and its important determinants in the context of West Bengal agriculture by using cost minimization principle in Data Envelopment Analysis. Empirical evidence suggest that choice of tenurial contract, inter-linkage of factor markets and availability of credit are some of the factors, inter alia, which are found to have significant bearing on the level of allocative efficiency. Interestingly, inter-linkage of factor markets is observed to be an "efficiency improving institutional change" in rural agrarian economy.