Efficiency of the Multiplant, Multiproduct Firm

Jayashree Sil and Steven Buccola

American Journal of Agricultural Economics, 1995, vol. 77, issue 4, 1001-1011

Abstract: A general framework is provided for assessing the technology, cost, and efficient scale of a multiplant, multiproduct firm. We show sufficient conditions for the existence of a plant cost function, and necessary and sufficient conditions for using plant-level data to draw exact firm-level cost inferences. We also distinguish between plant and input nonjointness and show the optimal relation between plant-level and firm-level cost elasticity in a multiproduct setting. The framework is applied to a vegetable processing cooperative, which is found to operate below its efficient scale.

Date: 1995
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