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Short-Run Supply of Services—The Case of Soybean Processing

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  • Allen B. Paul
  • William T. Wesson

Abstract

This article measures a short-run industry supply function for a processing service (US. soybean crushing) that has no explicit market. Three different crushing margins were used, reflecting different assumptions about the timing of commodity transactions and deliveries. The quantity variable is the percentage of crushing capacity utilized. Single equations were fitted by least squares to annual and seasonal data (covering the 1952–53 to 1963–64 period) using the different margins. The coefficients obtained have positive signs and low elasticities. But some are not statistically significant. The best results utilize the most plausible measure of the price of processing— i.e., one that allows for a production interval through use of forward commodity markets. But almost as good results were obtained with a proxy measure that is much easier to compute. Some implications of this study for analyzing other business services, industry structure, and farm prices are briefly discussed.

Suggested Citation

  • Allen B. Paul & William T. Wesson, 1966. "Short-Run Supply of Services—The Case of Soybean Processing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(4_Part_I), pages 935-951.
    • Handle: RePEc:oup:ajagec:v:48:y:1966:i:4_part_i:p:935-951.
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    File URL: http://hdl.handle.net/10.2307/1236623
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    Cited by:

    1. Hardaway, Irene L., 1968. "Economics of Agriculture: Reports and Publications Issued or Sponsored by USDA's Economic Research Service, October 1966-September 1967," Miscellaneous Publications 321800, United States Department of Agriculture, Economic Research Service.
    2. Plato, Gerald E., 2001. "The Soybean Processing Decision: Exercising A Real Option On Processing Margins," Technical Bulletins 33567, United States Department of Agriculture, Economic Research Service.
    3. Paul, Allen B., 1978. "Some Basic Problems of Research into Competition in Agricultural Markets," Economics Statistics and Cooperative Services (ESCS) Reports 329902, United States Department of Agriculture, Economic Research Service.

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