Premium
Local versus Global Separability in Agricultural Household Models: The Factor Price Equalization Effect of Land Transfer Rights
Author(s) -
Carter Michael R.,
Yao Yang
Publication year - 2002
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/1467-8276.00329
Subject(s) - allocative efficiency , economics , shadow price , econometrics , consumption (sociology) , property rights , shadow (psychology) , china , panel data , transfer (computing) , production (economics) , estimation , equalization (audio) , microeconomics , statistics , mathematics , geography , psychology , mathematical optimization , social science , decoding methods , archaeology , sociology , parallel computing , computer science , psychotherapist , management
Commonly employed global tests for separability between production and consumption decisions are theoretically inappropriate when the market failures creating non‐separabilities differentially constrain some, but not all households. Simulated maximum likelihood estimates using Chinese panel data reject the restrictions implied by a global separability test in favor of regime‐specific or local separability tests. The estimates also show that a global approach to separability obscures the significant effect that less‐encumbered land transfer rights would have on shadow factor price equalization across households and allocative efficiency. The findings on transfer rights suggest a resolution to the debate in China on further property rights reform.