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The influence of size on cost behaviour associated with tactical and operational flexibility

  • Josep Mª Argilés Bosch
  • Josep García Blandón


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    This paper contributes with an empirical analysis, using a sample of farms, on the influence of size on cost behaviour under operational and tactical flexibility. Results indicate that small farms behave advantageously with respect to biggest farms in situations of operational and tactical flexibility. On the one hand, the increase in indirect costs with product diversification is higher in bigger farms than in smaller. On the other hand, while most farms are flexible enough to avoid cost stickiness, the biggest face considerable rigidities in downsizing indirect costs when activity decreases.

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    Article provided by University of Chile, Department of Economics in its journal Estudios de Economia.

    Volume (Year): 38 (2011)
    Issue (Month): 2 Year 2011 (December)
    Pages: 419-455

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    Handle: RePEc:udc:esteco:v:38:y:2011:i:1:p:419-455
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    1. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
    2. Alvarez, Roberto & Crespi, Gustavo, 2003. " Determinants of Technical Efficiency in Small Firms," Small Business Economics, Springer, vol. 20(3), pages 233-44, May.
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    4. Mills, David E, 1984. "Demand Fluctuations and Endogenous Firm Flexibility," Journal of Industrial Economics, Wiley Blackwell, vol. 33(1), pages 55-71, September.
    5. Dragan Miljkovic, 2005. "Measuring and causes of inequality in farm sizes in the United States," Agricultural Economics, International Association of Agricultural Economists, vol. 33(1), pages 21-27, 07.
    6. Christine Wieck & Thomas Heckelei, 2007. "Determinants, differentiation, and development of short-term marginal costs in dairy production: an empirical analysis for selected regions of the EU," Agricultural Economics, International Association of Agricultural Economists, vol. 36(2), pages 203-220, 03.
    7. Dhawan, Rajeev, 2001. "Firm size and productivity differential: theory and evidence from a panel of US firms," Journal of Economic Behavior & Organization, Elsevier, vol. 44(3), pages 269-293, March.
    8. Schmitt, Gunther, 1991. "Why Is the Agriculture of Advanced Western Economies Still Organized by Family Farms? Will This Continue to Be So in the Future?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 18(3-4), pages 443-58.
    9. Das, Bhaskar J & Chappell, William F & Shughart, William F, II, 1993. "Demand Fluctuations and Firm Heterogeneity," Journal of Industrial Economics, Wiley Blackwell, vol. 41(1), pages 51-60, March.
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