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The concept of economies of scale in a multiproduct industry and its implications for the future of agriculture

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  • J.MARC BOUSSARD

Abstract

The concept of economies of scale is carefully defined, and the confusion which often arises from not making a distinction between economies of scale and advantages in production structure is pointed out. It is suggested that economies of scale play a minor role in agriculture, in spite of the differences observed in the rates of return between farms of various sizes. The consequences of this hypothests on the evolution of the agricultural sector are then examined. There is no optimal size of farm. Existing sizes can range between a minimum, corresponding to a level of subsistence for the poorest farms, and a maximum, at a size beyond which economies of scale appear in industry. When, as a result of some technical progress, economies of scale develop in whose scope consequently tends to shrink progressively.

Suggested Citation

  • J.Marc Boussard, 1976. "The concept of economies of scale in a multiproduct industry and its implications for the future of agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 3(1), pages 53-70.
    • Handle: RePEc:oup:erevae:v:3:y:1976:i:1:p:53-70.
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    File URL: http://hdl.handle.net/10.1093/erae/3.1.53
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    Cited by:

    1. Boussard, Jean-Marc, 1985. "Changing Environment and Structural Heterogeneity in Agriculture," 1985 Conference, August 26-September 4, 1985, Malaga, Spain 182616, International Association of Agricultural Economists.
    2. Jean-Marc Boussard & I. Foulhouze, 1980. "La productivité des exploitations du RICA, 1970-1977," Économie rurale, Programme National Persée, vol. 140(1), pages 3-9.

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