Grassland rental markets and herder technical efficiency: ability effect or resource equilibration effect?

To fully explore how grassland rental markets improve herder technical efficiency and to what extent, we apply a Metafrontier-DEA approach in this study to examine the impacts of herder participation in grassland rental markets and its technical efficiencies. We collect field data from 416 herder households, and our result shows that herders involved in the grassland rental markets can increase their technical efficiency by 2.75% on average. Compared with the autarky group, the lessors increase their efficiency by 3.36%, and the lessees increase their efficiency by 2.76%. No significant difference in efficiency is found between the lessors and the lessees. We conclude that grassland rental markets improve herder technical efficiency mainly through resource equilibration effect rather than ability effect. As long as herders participate in the grassland rental markets, they can improve their efficiency by balancing family resources and thus enhance production efficiency. This suggests that under the current institutional environment, more attention should be drawn on the normalization and guidance of grassland rental markets. More efforts should be made to allow herders to participate in the markets on their own will, rather than to address land transfer from the less able producers to the more-able producers.