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Cost stickiness revisited: Empirical aplication for farms

  • Josep Maria Argiles Bosch
  • Josep Garcia Blandon

    (Universitat de Barcelona)

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    This article reviews previous research regarding cost stickiness and performs an empirical analysis applied to a sample of farms. It recognizes that modelization of cost stickiness is a particular case of representation of cost variations as a function of output variations. It also discusses methodological issues and analyses cost stickiness for all registered farm costs and opportunity costs of family work. Costs exhibit a considerable level of rigidity. Even for variable costs, a decrease in activity involves a lower decrease in costs than the amounts involved when activity increases. While registered indirect costs slightly decrease when activity decreases, opportunity costs always increase. The study provides empirical evidence that cost stickiness is significantly reduced with better management decision practices.

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    Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number 187.

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    Length: 26 pages
    Date of creation: 2007
    Date of revision:
    Handle: RePEc:bar:bedcje:2007187
    Contact details of provider: Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques. Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona. Spain.
    Web page: http://www.ere.ub.es

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    1. Noreen, Eric & Noreen, Eric & Soderstrom, Naomi, 1994. "Are overhead costs strictly proportional to activity? : Evidence from hospital departments," Journal of Accounting and Economics, Elsevier, vol. 17(1-2), pages 255-278, January.
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