Effects of Allocative Inefficiency on Input Substitution in Iran\'s Manufacturing Sector
According to the neoclassical approach, input prices as a measure of resources scarcity induce firms to cost-minimizing and efficient allocation of recourses. But when the prices are distorted, the effective competitive inputs are used inefficiently and have resulted in under- or over-utilization of...
| Main Authors: | , |
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| Format: | Article |
| Language: | fas |
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Tarbiat Modares University
2010-05-01
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| Series: | پژوهشهای اقتصادی |
| Subjects: | |
| Online Access: | http://ecor.modares.ac.ir/article-18-12134-en.pdf |
| _version_ | 1797803201139834880 |
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| author | Hossein Sadeghi Touhid Ferouzan Sarnaghi |
| author_facet | Hossein Sadeghi Touhid Ferouzan Sarnaghi |
| author_sort | Hossein Sadeghi |
| collection | DOAJ |
| description | According to the neoclassical approach, input prices as a measure of resources scarcity induce firms to cost-minimizing and efficient allocation of recourses. But when the prices are distorted, the effective competitive inputs are used inefficiently and have resulted in under- or over-utilization of production factors relative to their endowments or allocative inefficiency.
In this paper, the shadow cost approach and system of equations are used to estimate allocative inefficiency using the Iran's manufacturing data over the period 1976-2006. The results show that there is strong allocative inefficiency and increasing cost of production of firms in Iran's Manufacturing Sector. |
| first_indexed | 2024-03-13T05:17:19Z |
| format | Article |
| id | doaj.art-897025cfa25d461b91ed91a5320186ad |
| institution | Directory Open Access Journal |
| issn | 1735-6768 2980-7832 |
| language | fas |
| last_indexed | 2024-03-13T05:17:19Z |
| publishDate | 2010-05-01 |
| publisher | Tarbiat Modares University |
| record_format | Article |
| series | پژوهشهای اقتصادی |
| spelling | doaj.art-897025cfa25d461b91ed91a5320186ad2023-06-15T20:32:50ZfasTarbiat Modares Universityپژوهشهای اقتصادی1735-67682980-78322010-05-0110100Effects of Allocative Inefficiency on Input Substitution in Iran\'s Manufacturing SectorHossein Sadeghi0Touhid Ferouzan Sarnaghi1 management and economics Faculty, Tarbiat Modares University management and economics Faculty, Tarbiat Modares University According to the neoclassical approach, input prices as a measure of resources scarcity induce firms to cost-minimizing and efficient allocation of recourses. But when the prices are distorted, the effective competitive inputs are used inefficiently and have resulted in under- or over-utilization of production factors relative to their endowments or allocative inefficiency. In this paper, the shadow cost approach and system of equations are used to estimate allocative inefficiency using the Iran's manufacturing data over the period 1976-2006. The results show that there is strong allocative inefficiency and increasing cost of production of firms in Iran's Manufacturing Sector.http://ecor.modares.ac.ir/article-18-12134-en.pdfc32c32d21d21d24 o14price distortionallocative inefficiencyshadow cost functioninput marketsmanufacturing sector jel classification: c30d24o14 |
| spellingShingle | Hossein Sadeghi Touhid Ferouzan Sarnaghi Effects of Allocative Inefficiency on Input Substitution in Iran\'s Manufacturing Sector پژوهشهای اقتصادی c32 c32 d21 d21 d24 o14 price distortion allocative inefficiency shadow cost function input markets manufacturing sector jel classification: c30 d24 o14 |
| title | Effects of Allocative Inefficiency on Input Substitution in Iran\'s Manufacturing Sector |
| title_full | Effects of Allocative Inefficiency on Input Substitution in Iran\'s Manufacturing Sector |
| title_fullStr | Effects of Allocative Inefficiency on Input Substitution in Iran\'s Manufacturing Sector |
| title_full_unstemmed | Effects of Allocative Inefficiency on Input Substitution in Iran\'s Manufacturing Sector |
| title_short | Effects of Allocative Inefficiency on Input Substitution in Iran\'s Manufacturing Sector |
| title_sort | effects of allocative inefficiency on input substitution in iran s manufacturing sector |
| topic | c32 c32 d21 d21 d24 o14 price distortion allocative inefficiency shadow cost function input markets manufacturing sector jel classification: c30 d24 o14 |
| url | http://ecor.modares.ac.ir/article-18-12134-en.pdf |
| work_keys_str_mv | AT hosseinsadeghi effectsofallocativeinefficiencyoninputsubstitutioniniransmanufacturingsector AT touhidferouzansarnaghi effectsofallocativeinefficiencyoninputsubstitutioniniransmanufacturingsector |