BARRIERS TO EFFICIENCY AND THE PRIVATIZATION OF TOWNSHIP-VILLAGE ENTERPRISES



havioral models of the LG in the transition economy, we will attempt to identify the LG
influence via the TVE’s and PE’s observed production behavior. In the empirical section we
conduct an exercise that assumes the observed employment and output levels of TVEs and
PEs are levels induced by LGs. Likewise, the observed expenditure constraint is assumed to
be consistent with LG efforts and institutional factors.

3 Methodology

To investigate how these factors such as access to credit, technology adoption, input al-
location efficiencies, and forced inefficient output/labor decisions influence TVEs and PEs
profit-maximizing behavior, we need an empirical method which could include all these fac-
tors into the profit maximization model.

Following the work by Shepard on indirect production theory, Chambers (1982) developed
an analytical framework to use in analyzing optimization problems in the face of expendi-
ture constraints. Lee and Chambers (1986) developed a theory of short-run expenditure
constrained profit maximization and econometrically tested it using US agricultural data.
Later, Fare, Grosskopf and Lee (1990), or FGL, developed a nonparametric alternative to
the Lee and Chambers model for testing expenditure constraints. They applied this model
to a sample of California rice farms. Arnade and Gopinath (2000), or AG, extended the FGL
approach to test for the presence of expenditure constraints and output-target constraints as
sources of inefficiency, and examined economic performance in 73 Russian crop production
regions.

As outlined in FGL and AG, this model consists of a series of linear programming prob-
lems. Similar to the nonparametric efficiency measures to which they are related, this linear
programming approach produce individual measures of performance too and therefore al-
lows us to identify whether an individual enterprise faces expenditure constraints, revenue

10



More intriguing information

1. ENVIRONMENTAL POLICY: THE LEGISLATIVE AND REGULATORY AGENDA
2. The name is absent
3. Menarchial Age of Secondary School Girls in Urban and Rural Areas of Rivers State, Nigeria
4. The name is absent
5. Government spending composition, technical change and wage inequality
6. Design and investigation of scalable multicast recursive protocols for wired and wireless ad hoc networks
7. Altruism with Social Roots: An Emerging Literature
8. Keystone sector methodology:network analysis comparative study
9. Opciones de política económica en el Perú 2011-2015
10. Effort and Performance in Public-Policy Contests