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Abstract
Over the last two decades, the number of
U.S. cottonseed processing plants has
declined drastically. The realization of
scale economies by expanding plant size is
shown to be a basic reason for this decline.
The analysis is performed by estimation of
a nonhomothetic translog cost function to
represent the industry structure. Statistical
tests indicate that the translog function is
appropriate. Other results indicate that
derived demands for inputs in cottonseed
processing are inelastic and that economies
of scale are greater for smaller plants in
the industry.