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A province-level analysis of economies of scale in Canadian food processing

Author

Listed:
  • Gervais, J.P.
  • Bonroy, O.
  • Couture, S.

Abstract

Cost functions of three Canadian food processing sectors (meat, bakery and dairy) are estimated using provincial data. A translog functional form is used and the concavity property of the cost function is imposed locally. The Morishima substitution elasticities and scale elasticities are computed for different provinces. Inference is carried out using asymptotic theory as well as bootstrap methods. The evidence suggests that there are significant substitution possibilities between the agricultural input and other production factors in the meat and bakerysectors. Scale elasticities suggest that increasing returns to scale are present in bakery and meat industries. To account for supply management in the dairy sector, separability between raw milk and other inputs was introduced. There exists evidence of increasing returns to scale at the industry level in the small producing provinces, but decreasing returns to scale in the two largest dairy provinces (Ontario and Quebec).

Suggested Citation

  • Gervais, J.P. & Bonroy, O. & Couture, S., 2007. "A province-level analysis of economies of scale in Canadian food processing," Working Papers 200710, Grenoble Applied Economics Laboratory (GAEL).
  • Handle: RePEc:gbl:wpaper:200710
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    File URL: https://gael.univ-grenoble-alpes.fr/sites/gael/files/doc-recherche/WP/A2007/gael2007-19.pdf
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    File URL: http://dx.doi.org/10.1007/s11149-008-9058-z
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    References listed on IDEAS

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    1. Baldwin, John R. & Sabourin, David & West, Donald, 1999. "Advanced Technology in the Canadian Food Industry," Advanced Technology in the Canadian Food Industry, Statistics Canada, Economic Analysis Division, number stcb4e, February.
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    Cited by:

    1. Yazid Dissou & Reza Ghazal, 2010. "Energy Substitutability in Canadian Manufacturing Econometric Estimation with Bootstrap Confidence Intervals," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 121-148.
    2. Chris Ross, 2011. "A Detailed Analysis of the Productivity Performance of the Canadian Food Manufacturing Subsector," CSLS Research Reports 2011-07, Centre for the Study of Living Standards.

    More about this item

    Keywords

    TRANSLOG COST FUNCTION; FOOD PROCESSING INDUSTRY; RETURNS TO SCALE; DOUBLE BOOTSTAP;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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