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Diseconomies of Size with Fixed Managerial Ability

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  • Antonio Alvarez
  • Carlos Arias

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, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/1467-8276.00108
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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 85 (2003)
Issue (Month): 1 ()
Pages: 134-142

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Handle: RePEc:oup:ajagec:v:85:y:2003:i:1:p:134-142

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