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Economies Of Scale In Agriculture: A Reexamination Of The Evidence

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  • Kislev, Yoav
  • Peterson, Willis L.

Abstract

It is generally accepted that agricultural production is characterized by increasing returns to scale. In this paper we examine the evidence allegedly supporting this assertation and come to the conclusion that the hypothesis of increasing returns is not warranted. The essence of our argument is that if increasing returns were important we would have seen huge "food factories" dominating the industry. Instead, the dominating form of organization is the family unit and farms come in a multitude of sizes--as can be expected in a constant cost industry.

Suggested Citation

  • Kislev, Yoav & Peterson, Willis L., 1991. "Economies Of Scale In Agriculture: A Reexamination Of The Evidence," Staff Papers 13652, University of Minnesota, Department of Applied Economics.
  • Handle: RePEc:ags:umaesp:13652
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    File URL: http://ageconsearch.umn.edu/record/13652/files/p91-43.pdf
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    References listed on IDEAS

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    1. Kumbhakar, Subal C & Biswas, Basudeb & Bailey, DeeVon, 1989. "A Study of Economic Efficiency of Utah Dairy Farmers: A System Approach," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 595-604, November.
    2. Giancarlo Moschini, 1990. "Nonparametric and Semiparametric Estimation: An Analysis of Multiproduct Returns to Scale," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 589-596.
    3. Ruttan, Vernon W., 1988. "Scale, Size, Technology And Structure: A Personal Perspective," 1988 Conference, January 16-19, San Antonio, Texas 260097, Regional Research Committe NC-181: Determinants of Farm Size and Structure.
    4. Ruttan, Vernon W., 1988. "Scale, Size, Technology And Structure: A Personal Perspective," Staff Papers 13832, University of Minnesota, Department of Applied Economics.
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    Cited by:

    1. Dries, Liesbeth & Swinnen, Johan F. M., 2002. "Institutional Reform and Labor Reallocation During Transition: Theory Evidence From Polish Agriculture," World Development, Elsevier, vol. 30(3), pages 457-474, March.
    2. Marcos Gallacher, 2010. "The changing structure of production: Argentine agriculture 1988-2002," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 3-28, January-D.
    3. Erik Mathijs & Johan F. M. Swinnen, 2001. "Production Organization And Efficiency During Transition: An Empirical Analysis Of East German Agriculture," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 100-107, February.
    4. Johan F. M. Swinnen & Liesbeth Dries & Karen Macours, 2005. "Transition and agricultural labor," Agricultural Economics, International Association of Agricultural Economists, vol. 32(1), pages 15-34, January.
    5. repec:ags:phajad:258972 is not listed on IDEAS
    6. Kirsten, Johann F. & van Zyl, Johan, 1998. "Defining Small-Scale Farmers In The South African Context," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 0(Issue 4), pages 1-12, December.
    7. Sara Savastano & Pasquale Lucio Scandizzo, 2009. "Optimal farm size in an uncertain land market: the case of Kyrgyz Republic," Agricultural Economics, International Association of Agricultural Economists, vol. 40(s1), pages 745-758, November.
    8. Johnson, Nancy L. & Ruttan, Vernon W., 1994. "Why are farms so small?," World Development, Elsevier, vol. 22(5), pages 691-706, May.
    9. repec:ags:agreko:267829 is not listed on IDEAS
    10. Peterson, Willis L., 1991. "Relation Between Crop Yields And Estimated Returns To Scale And Returns To Research," Staff Papers 13430, University of Minnesota, Department of Applied Economics.

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    Keywords

    Industrial Organization;

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