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Economies Of Scale In Agriculture: A Reexamination Of The Evidence

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  • Kislev, Yoav
  • Peterson, Willis L.
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    Abstract

    It is generally accepted that agricultural production is characterized by increasing returns to scale. In this paper we examine the evidence allegedly supporting this assertation and come to the conclusion that the hypothesis of increasing returns is not warranted. The essence of our argument is that if increasing returns were important we would have seen huge "food factories" dominating the industry. Instead, the dominating form of organization is the family unit and farms come in a multitude of sizes--as can be expected in a constant cost industry.

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    File URL: http://purl.umn.edu/13652
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    Bibliographic Info

    Paper provided by University of Minnesota, Department of Applied Economics in its series Staff Papers with number 13652.

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    Date of creation: 1991
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    Handle: RePEc:ags:umaesp:13652

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    Keywords: Industrial Organization;

    References

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    1. Ruttan, Vernon W., 1988. "Scale, Size, Technology And Structure: A Personal Perspective," Staff Papers 13832, University of Minnesota, Department of Applied Economics.
    2. Moschini, GianCarlo, 1990. "Nonparametric and Semiparametric Estimation: An Analysis of Multiproduct Returns to Scale," Staff General Research Papers 11262, Iowa State University, Department of Economics.
    3. Kumbhakar, Subal C & Biswas, Basudeb & Bailey, DeeVon, 1989. "A Study of Economic Efficiency of Utah Dairy Farmers: A System Approach," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 595-604, November.
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    Cited by:
    1. Swinnen, Johan F.M. & Dries, Liesbeth & Macours, Karen, 2001. "Transition And Agricultural Labour," 2001 Annual meeting, August 5-8, Chicago, IL 20602, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Johnson, Nancy L. & Ruttan, Vernon W., 1994. "Why are farms so small?," World Development, Elsevier, vol. 22(5), pages 691-706, May.
    3. Peterson, Willis L., 1991. "Relation Between Crop Yields And Estimated Returns To Scale And Returns To Research," Staff Papers 13430, University of Minnesota, Department of Applied Economics.
    4. Marcos Gallacher, 2010. "The changing structure of production: Argentine agriculture 1988-2002," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 3-28, January-D.
    5. Dries, Liesbeth & Swinnen, Johan F. M., 2002. "Institutional Reform and Labor Reallocation During Transition: Theory Evidence From Polish Agriculture," World Development, Elsevier, vol. 30(3), pages 457-474, March.
    6. Kirsten, Johann F. & van Zyl, Johan, 1998. "Defining Small-Scale Farmers In The South African Context," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 37(4), December.

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