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Diseconomies of Size with Fixed Managerial Ability

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Author Info
Antonio Alvarez
Carlos Arias

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Abstract

Managerial ability has important implications for farm growth. In this article we first show in a production model that increasing output with a fixed level of managerial ability can lead to a decrease in profits. Next, we discuss the effect that managerial ability has on economies of size. In the empirical part, economies of size are estimated for a sample of dairy farms using a proxy for managerial ability, which is calculated as a technical efficiency index. The results show that increasing farm size while holding managerial ability constant can be an important source of diseconomies of size. Copyright 2003 American Agricultural Economics Association.

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Publisher Info
Article provided by American Agricultural Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 85 (2003)
Issue (Month): 1 (02)
Pages: 134-142
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Handle: RePEc:bla:ajagec:v:85:y:2003:i:1:p:134-142

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  1. Renwick, Alan W. & Revoredo, Cesar L. & Reader, Mark A., 2005. "UK Sugar Beet Farm Productivity Under Different Reform Scenarios: A Farm Level Analysis," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24665, European Association of Agricultural Economists. [Downloadable!]
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  2. Siebert, W. Stanley & Zubanov, Nikolay, 2008. "Management Economics in a Large Retail Organization," IZA Discussion Papers 3645, Institute for the Study of Labor (IZA). [Downloadable!]
  3. W. Stanley Siebert & Nick Zubanov, 2009. "Management economics in a large UK retailer," CPB Discussion Papers 125, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  4. Antonio Álvarez & Carlos Arias & William Greene, 2004. "Accounting for unobservables in production models:management and inefficiency," Economic Working Papers at Centro de Estudios Andaluces E2004/72, Centro de Estudios Andaluces. [Downloadable!]
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  5. Dalton, Timothy J., 2004. "Indivisible And Spatial Components Of Dairy Firm Efficiency," 2004 Annual meeting, August 1-4, Denver, CO 20320, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  6. Renwick, Alan W. & Giha, Cesar L. Revoredo, 2005. "Crop Substitution on UK Sugar Beet Farms and its Effects on the Environment: A Multi-Product Cost Function Approach," 2005 Annual meeting, July 24-27, Providence, RI 19387, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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  7. Almuhanad Melhim & Erik J. O'Donoghue & C. Richard Shumway, 2008. "Do the Largest Firms Grow and Diversify the Fastest? The Case of U.S. Dairies," Working Papers 2008-7, School of Economic Sciences, Washington State University. [Downloadable!]
  8. Palmer, Donald W. & Pemberton, Carlisle A., 2007. "An Estimation of the Efficient Size of Sugarcane Enterprises for Farmers in Trinidad," Farm and Business - The Journal of The Caribbean Agro-Economic Society, Caribbean Agro-Economic Society, vol. 7(1), June. [Downloadable!]
  9. Carlos San Juan Mesonada & Stefan Sperlich & Carmen Murillo & Werner Kleinhans, 2005. "Efficiency, subsidies and environmental adaptation of animal farming under CAP," Others 0512015, EconWPA. [Downloadable!]
  10. Mosheim, Roberto & Lovell, C.A. Knox, 2006. "Economic Efficiency, Structure and Scale Economies in the U.S. Dairy Sector," 2006 Annual meeting, July 23-26, Long Beach, CA 21440, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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