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Economies Of Scope And Scale Of Multi-Product U.S. Cash Grain Farms: A Flexible Fixed-Cost Quadratic (Ffcq) Model Analysis

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  • Mafoua, Edouard

Abstract

The evidence about the magnitude of scope and scale economies in U.S. cash grain farming is revealed from the empirical estimation of the flexible fixed cost quadratic (FFCQ) model. This framework explicitly disaggregates the crop output vector to take the heterogeneity of output and gives insight to farmers to answer interesting questions such as: Are three-crop farms more cost efficient than two-crop or single-crop farms? How important are economies of scope (fixed-cost and variable-cost components) in two-crop farms and three-crop farms? Two-crop farms as well as three-crop farms exhibit overall economies of scale and scope in all four-size categories that increase with the farm size. They are able to lower the cost of producing crops in the same farm by spreading fixed costs over two or three crops and/or by exploiting product cost complementarity, or diversifying risks.

Suggested Citation

  • Mafoua, Edouard, 2002. "Economies Of Scope And Scale Of Multi-Product U.S. Cash Grain Farms: A Flexible Fixed-Cost Quadratic (Ffcq) Model Analysis," 2002 Annual meeting, July 28-31, Long Beach, CA 19734, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea02:19734
    DOI: 10.22004/ag.econ.19734
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    4. Alem, Habtamu1 & Lien, Gudbrand1 & Kumbhakar, Subal C1 & Hardaker, J. Brian, 2017. "Economies Of Scale And Scope In The Norwegian Agriculture," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 260907, European Association of Agricultural Economists.

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