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Do the Largest Firms Grow and Diversify the Fastest? The Case of U.S. Dairies

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Author Info
Almuhanad Melhim
Erik J. O'Donoghue
C. Richard Shumway () (School of Economic Sciences, Washington State University)
Abstract

We analyze growth and diversification of U.S. dairy farms by examining changes in ten size cohorts and new entrants through three successive censuses. We reject Gibrat’s law and the mean reversion hypothesis of growth. Growth rates appear bimodal where the smallest and largest farm cohorts grow fastest. All cohorts diversify but the largest farms do not diversify as rapidly as medium-sized farms. New entrants are generally large, and they diversify more rapidly than comparably-sized incumbents. These data suggest that scale economies persist even for the largest cohort of U.S. dairy farms and scale economies dominate scope economies for large farms.

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File URL: http://www.ses.wsu.edu/PDFFiles/WorkingPapers/Shumway/Dairy_2nd_rev_080608.pdf
File Format: application/pdf
File Function: First version, 2008
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Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2008-7.

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Length: 33 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:wsu:wpaper:shumway-5

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Related research
Keywords: : census; dairy; diversification; growth; scale; scope;

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Find related papers by JEL classification:
Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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  1. Kostov, Philip & Patton, Myles & Moss, Joan & McErlean, Seamus, 2005. "Does Gibrat's Law Hold Amongst Dairy Farmers in Northern Ireland?," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24775, European Association of Agricultural Economists. [Downloadable!]
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