Endogenous production organization during market liberalization: farm level evidence from Romania

This paper analyzes the production organization structure of farm sectors in a transition country (TC) where a number of organization modes emerged. Under imperfect markets rural households make optimal organization mode choices by adjusting their physical resources according to the non-tradable managerial input that they allocate in farming. Empirical results for Romania strongly support the hypothesis that the optimal organization mode choice is influenced by household’s human and physical capital endowments as well as by the market environment. Policies providing access to capital and secure property rights would facilitate shift to individual farming modes and efficient resource reallocation