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2001•AgEcon Search (University of Minnesota, USA)Open access

SCOPE AND SCALE ECONOMIES FOR MULTI-PRODUCT FARMS: FIRM-LEVEL PANEL DATA ANALYSIS

Edouard Mafoua, Ferdaus Hossain, Mafoua, Edouard, Hossain, Ferdaus

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Abstract

This study used the flexible fixed cost quadratic function to analyze the cost structure of multi-product farms using farm-level panel data. The robustness of estimated parameters are examined using four panel data estimators. Results suggest that scale economies remain significant in Illinois farming. An increase in soybean acreage reduces the marginal cost of producing corn. Firm-specific effects, that indicate the levels of fixed costs, are found to be positive and significant.

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This study used the flexible fixed cost quadratic function to analyze the cost structure of multi-product farms using farm-level panel data. The robustness of estimated parameters are examined using four panel data estimators. Results suggest that scale economies remain significant in Illinois farming. An increase in soybean acreage reduces the marginal cost of producing corn. Firm-specific effects, that indicate the levels of fixed costs, are found to be positive and significant.

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Available abstract

This study used the flexible fixed cost quadratic function to analyze the cost structure of multi-product farms using farm-level panel data. The robustness of estimated parameters are examined using four panel data estimators. Results suggest that scale economies remain significant in Illinois farming. An increase in soybean acreage reduces the marginal cost of producing corn. Firm-specific effects, that indicate the levels of fixed costs, are found to be positive and significant.

Key concepts: Panel data, Economies of scope, Economies of scale, Econometrics, Estimator, Fixed effects model, Economics, Robustness (evolution)

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