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Abstract
Production and cost functions have long been recognized as vital components of economic
analyses relating to the individual firm. The U.S. Department of Agriculture, beginning
with the pioneering work of T V. J. Spillman, has been a continuing participant in their
empiric and theoretical development. Whereas early work emphasized farm production
and cost functions, much attention has centered lately on the marketing firm. This attention
has brought into sharper focus certain organizational and operating characteristics
of plants. With growing interest in the marketing area, the work in the Department
expanded to include cooperative research with several State experiment stations. A major
such effort has involved the Marketing Economics Division, Economic Research Service,
and the California Agricultural Experiment Station. This is the first of three papers
prepared for publication in Agricultural Economics Research to reflect some aspects of
theoretical and methodological developments in these studies. The following paper comments
on, and extends the results of, a statistical analysis of costs in the operation of feed
mills developed in a cooperative study with the Iowa Agricultural Experiment Station,
and reported in this journal by Richard Phillips in 1956. In a second paper the authors
will deal with the possibilities of developing production and cost functions from more detailed
analysis of accounting records of individual firms. A third paper will discuss the
technique of plant cost synthesis. This report grew out of research in plant cost and efficiency
carried on cooperatively by the Marketing Economics Division, Economic Research
Service, and the Giannini Foundation of Agricultural E conomics,University of California
at Berkeley. The authors are indebted to L. L. Sammet, B. C. French, and D. B. DeLoach
of the University of California, and W. F. Finner and V. J. Brensike of the Economic
Research Service, U.S. Department of Agriculture, for their helpful suggestions during
the preparation of this paper.