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Abstract

This study explores the impact of technical inefficiency on agricultural supply functions in Ukraine. Two models using a system of output supply and input demand equations were evaluated in this research: one without inefficiency included in the model and another with inefficiency included. A likelihood ratio test found that the model with inefficiency included was the preferred model in this case. Incorporation of inefficiency into the model increased output supply elasticities and did not dramatically change input demand elasticities. The own-price elasticities for grains, sugar beets, sunflowers, and potatoes showed inelastic positive signs that were statistically significant. The own-price input demands were negative and also inelastic; however, only fertilizer and fuels were statistically significant.

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