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Measurement and decomposition of flexibility of multi-output firms

Author

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  • Swetlana Renner
  • Thomas Glauben
  • Heinrich Hockmann

Abstract

Flexibility can be considered a crucial factor of competitive advantage, especially under conditions of dynamically changing environments. Based on the classical microeconomic definition, flexibility is characterised as a firm's ability to change output by sustaining its average costs. Using some recent concepts developed in production economics, this article proposes a primal flexibility measure for multi-product firms. When decomposed, this measure offers useful insights into possible sources of flexibility, especially by investigating the role of both scale and scope economies. This approach provides the theoretical basis for our investigation into the magnitude and sources of flexibility in the Polish agricultural sector.

Suggested Citation

  • Swetlana Renner & Thomas Glauben & Heinrich Hockmann, 2014. "Measurement and decomposition of flexibility of multi-output firms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 41(5), pages 745-773.
    • Handle: RePEc:oup:erevae:v:41:y:2014:i:5:p:745-773.
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    File URL: http://hdl.handle.net/10.1093/erae/jbt040
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    1. Hirsch, Stefan & Barissoul, Ayoub & Möhring, Niklas & Koppenberg, Maximilian, 2024. "Market power, profitability and the decision to exit organic dairy farming in the EU," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344258, International Association of Agricultural Economists (IAAE).
    2. Christian Grovermann & Sylvain Quiédeville & Adrian Muller & Florian Leiber & Matthias Stolze & Simon Moakes, 2021. "Does organic certification make economic sense for dairy farmers in Europe?–A latent class counterfactual analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 52(6), pages 1001-1012, November.
    3. repec:ags:cfcp15:344258 is not listed on IDEAS
    4. Takeshima, Hiroyuki & Hatzenbuehler, Patrick L. & Edeh, Hyacinth O., 2020. "Effects of agricultural mechanization on economies of scope in crop production in Nigeria," Agricultural Systems, Elsevier, vol. 177(C).
    5. Tsakiridis, Andreas & Breen, James & O'Donoghue, Cathal & Hanrahan, Kevin & Wallace, Michael & Crosson, Paul, 2016. "Flexibility of beef suckler cow systems under varying calf retention strategies," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236289, Agricultural Economics Society.
    6. Koppenberg, Maximilian & Mishra, Ashok K. & Dalhaus, Tobias & Hirsch, Stefan, 2023. "The value of firm flexibility under extreme positive demand shocks: COVID-19 and toilet paper panic purchases," Economics Letters, Elsevier, vol. 222(C).
    7. Hirsch, Stefan & Koppenberg, Maximilian, 2023. "Market power and profitability of organic versus conventional dairy farmers in the EU," 2023 Annual Meeting, July 23-25, Washington D.C. 335708, Agricultural and Applied Economics Association.
    8. repec:ags:aaea22:335708 is not listed on IDEAS
    9. Hirsch, Stefan & Mishra, Ashok K. & Finger, Robert, "undated". "Firm Flexibility in the EU Dairy Processing Industry," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258467, Agricultural and Applied Economics Association.
    10. Swetlana Renner & Thomas Glauben & Heinrich Hockmann & Pierre Ouellette, 2015. "Primal and dual multi-output flexibility measures," Journal of Productivity Analysis, Springer, vol. 44(2), pages 127-136, October.

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