Direct payments and competitiveness. Assessing redistributive effects of internal convergence in Italy

The objective of the paper is twofold. Firstly, investigating the relationship between competitiveness, measured by technical efficiency, and direct payments of a sample of Italian farms prior to the application of the 2014-2020 CAP reform. Secondly, evaluating possible implications of alternative scenarios about distribution of direct payments on technical efficiency. To these aims, a data envelopment analysis approach in conjunction with a double bootstrapped left-truncated regression model are adopted. Results indicate that direct payments are negatively associated with technical efficiency. Moreover, they show that redistribution of policy subsidies especially towards more inefficient farms provokes a decrease in overall technical efficiency.