A province-level analysis of economies of scale in Canadian food processing
AbstractCost functions of three Canadian food processing sectors (meat, bakery and dairy) are estimated using provincial data. A translog functional form is used and the concavity property of the cost function is imposed locally. The Morishima substitution elasticities and scale elasticities are computed for different provinces. Inference is carried out using asymptotic theory as well as bootstrap methods. The evidence suggests that there are significant substitution possibilities between the agricultural input and other production factors in the meat and bakerysectors. Scale elasticities suggest that increasing returns to scale are present in bakery and meat industries. To account for supply management in the dairy sector, separability between raw milk and other inputs was introduced. There exists evidence of increasing returns to scale at the industry level in the small producing provinces, but decreasing returns to scale in the two largest dairy provinces (Ontario and Quebec).
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Bibliographic InfoPaper provided by Grenoble Applied Economics Laboratory (GAEL) in its series Working Papers with number 200710.
Date of creation: 2007
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TRANSLOG COST FUNCTION; FOOD PROCESSING INDUSTRY; RETURNS TO SCALE; DOUBLE BOOTSTAP;
Other versions of this item:
- Jean-Philippe Gervais & Olivier Bonroy & Steve Couture, 2008. "A province-level analysis of economies of scale in Canadian food processing," Agribusiness, John Wiley & Sons, Ltd., vol. 24(4), pages 538-556.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
This paper has been announced in the following NEP Reports:
- NEP-AGR-2008-01-19 (Agricultural Economics)
- NEP-ALL-2008-01-19 (All new papers)
- NEP-EFF-2008-01-19 (Efficiency & Productivity)
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