Results from the estimation of several specifications of a production function
(Cobb-Douglas and constant-elasticity-of-substitution, CES) do not provide
evidence of the existence of increasing returns to scale in the Peruvian agriculture.
Our results also suggest the existence of market power in the cotton market,
although we are unable to determine whether the market structure is oligopolistic
orf monopsonistic. Furthermore, we find that the productivity, estimated as the
residual of the production function estimation, is positively correlated with age, sex,
and education, and negatively correlated with the farming unit’s acreage.