Vertical Economies of Scope in Dairy Farming

Mayen Carlos D, Joseph Balagtas () and Corinne Alexander
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Mayen Carlos D: New Mexico State University

Journal of Agricultural & Food Industrial Organization, 2009, vol. 7, issue 1, 17

Abstract: With the exception of Azzam and Skinner (2007), the economic literature on farm structure has largely neglected issues of vertical organization of the farm. In this article we estimate a multi-stage, multi-output cost function in order to measure vertical economies of scope in organic and conventional dairy farms. In particular, we model the integration of production of grains and forages on dairy farms. We find negligible vertical economies of scope for conventional dairy farms but significant vertical economies of scope in organic dairy production. The large vertical economies of scope for organic dairy farms are consistent with higher costs of obtaining organic feed through market transactions associated with an underdeveloped market for organic feeds.

Keywords: vertical economies of scope; vertical integration; dairy (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (11)

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DOI: 10.2202/1542-0485.1281

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