Land tenure and cost inefficiency: the case of rice (Oryza sativa L.) cultivation in Chile

This study aims to examine the impact of land tenure arrangements on production costs in a sample of rice farmers in Ñuble Region, Chile. A stochastic frontier model was estimated using the primal approach on a panel of 107 farmers in 2014-2015. Production cost was broken down into frontier costs and inefficiency. According to findings, economic inefficiency raises rice production costs by 82%. Technical inefficiency accounts for a 61% increase, while allocative inefficiency accounts for 21%. Across tenure types, land is the input with the highest misallocation, accounting for 93% of allocative inefficiency costs. Sharecropping is the arrangement allocating inputs most efficiently, producing significant differences in production costs relative to leasing and ownership. This finding suggests that before designing a policy to induce a tenure system, it is necessary to evaluate specific cases as there is no system superior to another, strictly speaking. Highlights: Economic inefficiency raises rice production costs by 82%. Technical inefficiency accounts for a 61% increase, while allocative inefficiency accounts for 21%. The sharecropping system stood out as the most efficient, with production costs 13.5% lower than the rental system and 3.4% lower than those of the ownership system. Sharecroppers have a higher incentive to exert more effort and complete all responsibilities more efficiently, which can cut down on or do away with the costs associated with supervision that are typical in wage labor systems.This study aims to examine the impact of land tenure arrangements on production costs in a sample of rice farmers in Ñuble Region, Chile. A stochastic frontier model was estimated using the primal approach on a panel of 107 farmers in 2014-2015. Production cost was broken down into frontier costs and inefficiency. According to findings, economic inefficiency raises rice production costs by 82%. Technical inefficiency accounts for a 61% increase, while allocative inefficiency accounts for 21%. Across tenure types, land is the input with the highest misallocation, accounting for 93% of allocative inefficiency costs. Sharecropping is the arrangement allocating inputs most efficiently, producing significant differences in production costs relative to leasing and ownership. This finding suggests that before designing a policy to induce a tenure system, it is necessary to evaluate specific cases as there is no system superior to another, strictly speaking. Highlights: Economic inefficiency raises rice production costs by 82%. Technical inefficiency accounts for a 61% increase, while allocative inefficiency accounts for 21%. The sharecropping system stood out as the most efficient, with production costs 13.5% lower than the rental system and 3.4% lower than those of the ownership system. Sharecroppers have a higher incentive to exert more effort and complete all responsibilities more efficiently, which can cut down on or do away with the costs associated with supervision that are typical in wage labor systems

Heterogeneity and nonlinearity in consumers’ preferences: An application to the olive oil shopping behavior in Chile

<div><p>In relatively unknown products, consumers use prices as a quality reference. Under such circumstances, the utility function can be non-negative for a specific price range and generate an inverted U-shaped function. The extra virgin olive oil market in Chile is a good example. Although domestic production and consumption have increased significantly in the last few years, consumer knowledge of this product is still limited. The objective of this study was to analyze Chilean consumer preferences and willingness to pay for extra virgin olive oil attributes. Consumers were segmented taking into account purchasing frequency. A Random Parameter Logit model was estimated for preference heterogeneity. Results indicate that the utility function is nonlinear allowing us to differentiate between two regimes. In the first regime, olive oil behaves as a conspicuous good, that is, higher utility is assigned to higher prices and consumers prefer foreign products in smaller containers. Under the second regime, Chilean olive oil in larger containers is preferred.</p></div

Willingness to pay (WTP) for positive and negative slope utility^a.

<p>Willingness to pay (WTP) for positive and negative slope utility^a.</p

Relationship between utility and extra virgin olive oil price in Chile.

<p>Relationship between utility and extra virgin olive oil price in Chile.</p

Random parameter logit estimates for the linear and nonlinear models^a^,^b^,^c^,^d.

<p>Random parameter logit estimates for the linear and nonlinear models<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0184585#t002fn001" target="_blank">^a</a>^,<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0184585#t002fn002" target="_blank">^b</a>^,<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0184585#t002fn003" target="_blank">^c</a>^,<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0184585#t002fn004" target="_blank">^d</a>.</p

Attributes and attribute levels for each extra virgin olive oil.

<p>Attributes and attribute levels for each extra virgin olive oil.</p

Example of choice card.

<p>Example of choice card.</p