Hydroponics Production Function, Returns to Scale and Domestic Resource Cost in Pakistan

Abstract

Hydroponics production function provides technically efficient production system in the globe. Technological development is changing the shape of production systems all over the world. A Cobb Douglas type hydroponics production system was developed for estimation of production elasticity of hydroponics in Pakistan. Return to scale was calculated by adding all betas, which indicate the stage of production function of hydroponics system. Domestic resource cost indicates relative efficiency of hydroponics products in domestic resource use. Results indicated that labor used in production of hydroponics products and supply chain management of hydroponics products both in the domestic market and in regional markets has significantly affecting total value product of the hydroponics. Return to scale value of 1.77 indicated that the product function is positive and increasing return to scale in TVP in relation to increase in input cost. The value of (DRC<1) indicated that Pakistan has comparative advantage in the efficiently utilizing domestic resources in the production of hydroponics products.