Agglomeration externalities and technical efficiency: An empirical application to the pond aquaculture of Pangas and Tilapia in Bangladesh

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Md Takibur Rahman, Rasmus Nielsen, Md Akhtaruzzaman Khan

This article analyzes the effects of agglomeration externalities on productivity and efficiency by applying a stochastic production frontier model with a technical inefficiency model to the aquaculture industry. Agglomeration externalities refer to the costs and benefits to firms from clustering. Agglomeration studies within aquaculture have focused on the intensive salmon industry, whereas this study focuses on low-technology, extensive pond aquaculture, representing most farmers in the developing world and using Bangladesh as an empirical case. The results show that there is a positive externality effect of regional industry size on the production possibility frontier and a negative effect on technical efficiency. Farm density enhances efficiency and the farm proximity to output markets decreases efficiency. Thus, policies aimed at increasing aquaculture pond production in developing countries should consider farm locations and their access to input and output markets, all of which affect farm productivity and efficiency.

Original languageEnglish
JournalAquaculture Economics and Management
Issue number2
Pages (from-to)158-187
Number of pages30
Publication statusPublished - 2019

    Research areas

  • Agglomeration externalities, Bangladesh, pond aquaculture, productivity, technical efficiency

ID: 217109446