ECONOMIES OF SCOPE AND SCALE OF MULTI-PRODUCT U.S. CASH GRAIN FARMS: A FLEXIBLE FIXED-COST QUADRATIC (FFCQ) MODEL ANALYSIS

The evidence about the magnitude of scope and scale economies in U.S. cash grain farming is revealed from the empirical estimation of the flexible fixed cost quadratic (FFCQ) model. This framework explicitly disaggregates the crop output vector to take the heterogeneity of output and gives insight to farmers to answer interesting questions such as: Are three-crop farms more cost efficient than two-crop or single-crop farms? How important are economies of scope (fixed-cost and variable-cost components) in two-crop farms and three-crop farms? Two-crop farms as well as three-crop farms exhibit overall economies of scale and scope in all four-size categories that increase with the farm size. They are able to lower the cost of producing crops in the same farm by spreading fixed costs over two or three crops and/or by exploiting product cost complementarity, or diversifying risks.


Issue Date:
2002
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/19734
Total Pages:
26
Series Statement:
Selected Paper




 Record created 2017-04-01, last modified 2017-11-20

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