Driver costs in small firms: empirical analysis for farms

Josep Maria Argiles Bosch and Josep Garcia Blandon
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Josep Garcia Blandon: Universitat de Barcelona

No 140, Working Papers in Economics from Universitat de Barcelona. Espai de Recerca en Economia

Abstract: The agricultural sector has always been characterized by a predominance of small firms. International competition and the consequent need for restraining costs are permanent challenges for farms. This paper performs an empirical investigation of cost behavior in agriculture using panel data analysis. Our results show that transactions caused by complexity influence farm costs with opposite effects for specific and indirect costs. While transactions allow economies of scale in specific costs, they significantly increase indirect costs. However, the main driver for farm costs is volume. In addition, important differences exist for small and big farms, since transactional variables significantly influence the former but not the latter. While sophisticated management tools, such ABC, could provide only limited complementary useful information but no essential allocation bases for farms, they seem inappropriate for small farms.

JEL-codes: M10 M40 M41 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2005
New Economics Papers: this item is included in nep-agr and nep-cfn
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