ORGANIZATIONAL FORM AND EFFICIENCY - EVIDENCE FROM INDIAN SUGAR MANUFACTURING

Frontier cost and production functions are used to examine the effects of ownership on intrafirm differences in technical, cost, and allocat ive efficiency in the Indian sugar processing industry. Cooperatives a re found to be as or more efficient than their counterparts. The resul ts suggest that technical and coordination economies of vertical integ ration provide important advantages for the cooperative form of organi zation. We also find that seasonal labor is overutilized and permanent labor is underutilized relative to their cost-minimizing proportions. This is possibly a second-best solution in light of employment regula tions.