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Volume 6, No. 1,
April 2007
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Efficiency of Indian Manufacturing Firms: Textile Industry
as a Case Study
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Anup Kumar Bhandari*
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Economic Research Unit, Indian Statistical
Institute, India
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Pradip Maiti
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Economic Research Unit, Indian Statistical
Institute, India
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Abstract
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Translog stochastic frontier production functions are fit
to firm-level cross-sectional data on India's textile
firms for each of five selected years to estimate
technical efficiency (TE) of firms. We find that average
TE varies between 68 to 84% across these years and that
individual TEs vary with firm-specific characteristics
such as size and age. Further, public sector firms are
found to be relatively less efficient.
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Key words
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textile industry; technical efficiency;
stochastic frontier;
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Cobb Douglas production function;
translog production function
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JEL classification
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C12; C13; L25
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