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Size Economies in Australian Agriculture

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  • Vlastuin, Chris
  • Lawrence, Denis
  • Quiggin, John C.

Abstract

Theoretical, conceptual and estimational issues relevant to economies of size studies are discussed in this paper. Some of the issues discussed are the effects of technological change on the position and shape of the average cost curve over time, the relationship between farm size and relative economic efficiency and frontier versus average estimation techniques. There is also a brief review of various measurement and specification problems. In addition, empirical estimates of the extent of size economies were derived from a flexible translog production function using ASIS data for the New South Wales Wheat/Sheep Zone for the years 1966-67, 1975-76 and 1976-77. Estimation of the production function revealed that, when the relatively fixed inputs of operator and family labour were excluded, the sample exhibited constant returns to scale. On the other hand, when operator and family labour were included, the cost curve exhibited the familiar L shape found in earlier agricultural studies.

Suggested Citation

  • Vlastuin, Chris & Lawrence, Denis & Quiggin, John C., 1982. "Size Economies in Australian Agriculture," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 50(01), pages 1-24, April.
    • Handle: RePEc:ags:remaae:12293
    DOI: 10.22004/ag.econ.12293
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    References listed on IDEAS

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    1. Hoch, Irving, 1976. "Production Functions and Supply Applications for California Dairy Farms," Monographs, University of California, Davis, Giannini Foundation, number 251911, December.
    2. Lawrence, Denis & McKay, Lloyd, 1980. "Inputs, Outputs And Productivity Change In The Australian Sheep Industry," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 24(1), pages 1-14, April.
    3. Jock R. Anderson & Roy A. Powell, 1973. "Economics Of Size In Australian Farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 17(1), pages 1-16, April.
    4. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    5. Denis Lawrence & Lloyd McKay, 1980. "Inputs, Outputs And Productivity Change In The Australian Sheep Industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 24(1), pages 46-59, April.
    6. Hanoch, Giora, 1975. "The Elasticity of Scale and the Shape of Average Costs," American Economic Review, American Economic Association, vol. 65(3), pages 492-497, June.
    7. Olson, Jerome A. & Schmidt, Peter & Waldman, Donald M., 1980. "A Monte Carlo study of estimators of stochastic frontier production functions," Journal of Econometrics, Elsevier, vol. 13(1), pages 67-82, May.
    8. Christensen, Laurits R & Greene, William H, 1976. "Economies of Scale in U.S. Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 655-676, August.
    9. Robinson, Chris & McMahon, Pat J., 1981. "Off-Farm Investment and Employment in the Australian Grazing Industry: A Preliminary Analysis," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 49(01), pages 1-21, April.
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    Cited by:

    1. Hodge, Ian D., 1983. "Rural Employment and the Quality of Life," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 51(03), pages 1-12, December.
    2. Ker, Alan & Howard, Wayne H., 1993. "Economies of Size in the Ontario Swine Industry," Department of Agricultural Economics and Business 258725, University of Guelph.
    3. Quiggin, John, 1995. "Common property in agricultural production," Journal of Economic Behavior & Organization, Elsevier, vol. 26(2), pages 179-200, March.
    4. Liu, Yu & Yan, Binjian & Wang, Yue & Zhou, Yingheng, 2019. "Will land transfer always increase technical efficiency in China?—A land cost perspective," Land Use Policy, Elsevier, vol. 82(C), pages 414-421.
    5. John C. Quiggin & Anh Bui‐Lan, 1984. "The Use Of Cross‐Sectional Estimates Of Profit Functions For Tests Of Relative Efficiency: A Critical Review," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 28(1), pages 44-55, April.
    6. Tomasz Gerard Czekaj & Arne Henningsen, 2012. "Comparing Parametric and Nonparametric Regression Methods for Panel Data: the Optimal Size of Polish Crop Farms," IFRO Working Paper 2012/12, University of Copenhagen, Department of Food and Resource Economics.
    7. Schmitt, Gunther H., 1992. "The Theory of Resource Allocation by Farm Households: The Role of Off farm Employment, Household Production and Transaction Costs," 1991 Conference, August 22-29, 1991, Tokyo, Japan 183342, International Association of Agricultural Economists.
    8. Power, A.P. & Watson, J.M., 1983. "Total factor productivity and alternative measures of farm size," Centre for Agricultural Strategy - Papers and Reports 337706, University of Reading.

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