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Supply of Dairy Products in Developing Countries

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  • Hanjoon M. Jung

    ()
    (Institute of Economics, Academia Sinica)

  • Abid A Burki

    ()
    (The Department of Economics, Lahore University of Management Sciences)

  • Mushtaq A Khan

    ()
    (The Department of Economics, Lahore University of Management Sciences)

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    Abstract

    Dairy products in developing countries are characterized by two properties, namely, perishability and short-periodic production. These properties are so unique that conventional studies in agricultural economics or in industrial organization might not explain the dairy product supply well. Hence, to understand this dairy product supply, we model it based on these two properties. We find that these properties invite middlemen who can efficiently deliver the products, and give rise to economies of scale in transportation and accessibility advantage in the dairy product supply. The economies of scale in transportation arise because greater production reduces average delivery costs per unit. The accessibility advantage occurs because lowering delivery costs significantly reduces total transportation costs in the long term.

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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 32 (2012)
    Issue (Month): 4 ()
    Pages: 3213-3223

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    Handle: RePEc:ebl:ecbull:eb-11-00828

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    Related research

    Keywords: Accessibility Advantage; Dairy Products; Dairy Product Supply; Economies of Scale; Perishability; Short-periodic Production;

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    1. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
    2. Jacek Cukrowski & Manfred M. Fischer, 2000. "Theory of Comparative Advantage: Do Transportation Costs Matter?," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 40(2), pages 311-322.
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