Productivity of an industry largely depends on the technical and allocative efficiency of its inputs. Technical Efficiency includes an optimum use of available resources and technology, whereas, Allocative Efficiency deals with how efficiently the available resources are allocated to various alternative uses. Estimation of Technical Efficiency is the main motivation behind the estimation of a Production Frontier. The points below the estimated production frontier are the indicators of Technical Inefficiency.
The present study aims at estimating the Deterministic and Stochastic Production Frontiers to analyze the Technical Efficiency Of Indian Plastic Industry with special reference to Poly Vinyl Chloride (PVC) Plastic since it is the most widely used form of Plastic. Last few decades have experienced a significant growth in Indian Plastic Industry. The study includes Productivity Measurement for Indian PVC Plastic Industry using various Productivity and Performance ratios. It also includes estimation of Deterministic and Stochastic Production Frontiers for the PVC Plastic Industry. The Cobb-Douglas Production Function is used for this purpose since it has been found to be the most appropriate form for Indian Industries from several research studies. Productive Capacity Realization Ratios have been obtained using the Frontier Estimates and thereby the efficiency levels in the PVC Plastic Industry are evaluated. The paper ends with identifying some reasons for the prevailing inefficiency in the industry and some measures to reduce these inefficiencies have been suggested.
Efficiency, Deterministic Frontier, Stochastic Frontier, Productivity
