Optimal Scale in a Large Homogeneous Area

John Hartwick

Working Paper from Economics Department, Queen's University

Abstract: The conditions under which transportation costs "balance out" returns to scale for many distinct production units on a large homogeneous plain are examined. Starrett's optimality principle is derived: that the Average Degree of Increasing Returns (ADIR) in an optimally sized production unit equals one half transportation costs. ADIR is defined as the difference between the value of inputs to producers and the value of output. We show that existence of optimally sized subareas requires that the elasticity of ADIR/A with respect to the radius of a subarea where A is the area of a subarea must be less than unity. Under certain conditions, hexagonally shaped subareas are optimal. Allocations are examined under different institutional arrangements.

Pages: 17
Date: 1976
References: Add references at CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Optimal scale in a large homogeneous area (1979)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:223

Access Statistics for this paper

More papers in Working Paper from Economics Department, Queen's University Contact information at EDIRC.
Bibliographic data for series maintained by Mark Babcock ().