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Economies of Scale and the Demand for Food in Switzerland: Parametric and Non‐Parametric Analysis

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  • Awudu Abdulai

Abstract

This paper examines the role of household public goods arising from co‐residence and economies of scale in the allocation of household expenditure. Using both parametric and non‐parametric methods, the paper tests the theoretical prediction that in the presence of shared public goods, larger households should have higher per capita consumption of private goods like food, provided that they do not substitute too much towards the effectively cheaper public good. The results indicate that, at constant per capita total expenditure, the per capita demand for food declines with household size. No evidence is found in favour of the hypothesis that the endogeneity of male and female hours of work in the labour force could be responsible for this anomaly. However, an examination of the role of direct economies of scale in explaining this negative relationship yielded a negative relationship between household size and quality adjusted unit values, suggesting that the effects of direct economies of scale dominate those generated by public goods.

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  • Awudu Abdulai, 2003. "Economies of Scale and the Demand for Food in Switzerland: Parametric and Non‐Parametric Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(2), pages 247-267, July.
    • Handle: RePEc:bla:jageco:v:54:y:2003:i:2:p:247-267
    DOI: 10.1111/j.1477-9552.2003.tb00062.x
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    Cited by:

    1. Vasiliki Fourmouzi & Margarita Genius & Peter Midmore, 2012. "The Demand for Organic and Conventional Produce in London, UK: A System Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(3), pages 677-693, September.
    2. Echeverría, Lucía & Molina, José Alberto, 2022. "Exploring household heterogeneities of the Deaton-Paxson puzzle: Evidence for Argentina," Nülan. Deposited Documents 3622, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    3. Thomas F. Crossley & Yuqian Lu, 2018. "Returns to scale in food preparation and the Deaton–Paxson puzzle," Review of Economics of the Household, Springer, vol. 16(1), pages 5-19, March.
    4. Perali, Federico, 2008. "The second Engel law: Is it a paradox?," European Economic Review, Elsevier, vol. 52(8), pages 1353-1377, November.
    5. John Gibson & Bonggeun Kim, 2018. "Economies of scale, bulk discounts, and liquidity constraints: comparing unit value and transaction level evidence in a poor country," Review of Economics of the Household, Springer, vol. 16(1), pages 21-39, March.
    6. Shari Eli & Nicholas Li, 2015. "Caloric Requirements and Food Consumption Patterns of the Poor," NBER Working Papers 21697, National Bureau of Economic Research, Inc.
    7. Houtian Ge & Patrick Canning & Stephan Goetz & Agnes Perez, 2018. "Effects of scale economies and production seasonality on optimal hub locations: the case of regional fresh produce aggregation," Agricultural Economics, International Association of Agricultural Economists, vol. 49(2), pages 157-169, March.

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