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Scale Economies and Inefficiency of U.S. Dairy Farms

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  • Roberto Mosheim
  • C.A. Knox Lovell

Abstract

This study employs data drawn from the 2000 Agricultural Resource Management Survey, a U.S. Department of Agriculture-sponsored farmers' survey. The article estimates returns to scale relationships across dairy farms of different sizes and across different regions, incorporating variables hypothesized to influence farm performance. Results point to significant scale economies in U.S. dairy farms and underscore the importance of taking account of inefficiency when estimating scale economies. Contrary to previous research, the preferred cost function specification does not show a region of decreasing returns to scale. This finding helps explain why the average size of dairy farms has been increasing. Copyright 2007, Oxford University Press.

Suggested Citation

  • Roberto Mosheim & C.A. Knox Lovell, 2007. "Scale Economies and Inefficiency of U.S. Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 777-794.
  • Handle: RePEc:oup:ajagec:v:91:y:2007:i:3:p:777-794
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2009.01269.x
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    References listed on IDEAS

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    1. Steven T. Yen & Andrew M. Jones, 1997. "Household Consumption of Cheese: An Inverse Hyperbolic Sine Double-Hurdle Model with Dependent Errors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 246-251.
    2. Goodwin, Barry K., 1992. "An Analysis Of Factors Associated With Consumers' Use Of Grocery Coupons," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(01), July.
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    4. Diansheng Dong & Brian W. Gould, 2000. "Quality versus quantity in Mexican household poultry and pork purchases," Agribusiness, John Wiley & Sons, Ltd., vol. 16(3), pages 333-355.
    5. Diansheng Dong & J.S. Shonkwiler & Oral Capps, 1998. "Estimation of Demand Functions Using Cross-Sectional Household Data: The Problem Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 466-473.
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