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Efficiency of the Multiplant, Multiproduct Firm

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  • Jayashree Sil
  • Steven Buccola

Abstract

A general framework is provided for assessing the technology, cost, and efficient scale of a multiplant, multiproduct firm. We show sufficient conditions for the existence of a plant cost function, and necessary and sufficient conditions for using plant-level data to draw exact firm-level cost inferences. We also distinguish between plant and input nonjointness and show the optimal relation between plant-level and firm-level cost elasticity in a multiproduct setting. The framework is applied to a vegetable processing cooperative, which is found to operate below its efficient scale.

Suggested Citation

  • Jayashree Sil & Steven Buccola, 1995. "Efficiency of the Multiplant, Multiproduct Firm," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(4), pages 1001-1011.
    • Handle: RePEc:oup:ajagec:v:77:y:1995:i:4:p:1001-1011.
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    File URL: http://hdl.handle.net/10.2307/1243823
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    Cited by:

    1. Alfons Oude Lansink & Spiro Stefanou, 2001. "Dynamic Area Allocation and Economies of Scale and Scope," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(3), pages 38-52, September.

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