Measurement and Sources of Economies of Scope: A Primal Approach

Specialization, diversification, and productivity: a panel data analysis of rice farms in Korea

“…Yet, there may also be benefits of firm diversification that can help explain the existence of multi‐product firms. These benefits can be evaluated using cost measurements (Baumol et al 1982; Panzar and Willig 1981) or productivity measurements (Chavas and Kim, 2007). Panzar and Willig (1981) and Baumol et al (1982) defined economies of scope when an integrated system costs less in producing given outputs than more specialized systems.…”

“…Panzar and Willig (1981) and Baumol et al (1982) defined economies of scope when an integrated system costs less in producing given outputs than more specialized systems. Chavas and Kim (2007) defined economies of diversification as the productivity gains obtained from using a more integrated production system, holding aggregate resource inputs constant. In addition, Chavas and Kim (2007) show that economies of diversification can be decomposed into three components: complementarities among outputs (measuring whether one output contributes to improving the marginal productivity of others); scale effects (reflecting the role of economies of scale); and a convexity component (reflecting diminishing marginal productivity).…”

“…Chavas and Kim (2007) defined economies of diversification as the productivity gains obtained from using a more integrated production system, holding aggregate resource inputs constant. In addition, Chavas and Kim (2007) show that economies of diversification can be decomposed into three components: complementarities among outputs (measuring whether one output contributes to improving the marginal productivity of others); scale effects (reflecting the role of economies of scale); and a convexity component (reflecting diminishing marginal productivity). Below we build on their theoretical framework to show that this decomposition provides useful insights that can help explain the patterns of specialization/diversification in Asian agriculture.…”

Linear Programming in the economic estimate of livestock-crop integration: application to a Brazilian dairy farm

“…Effects of fixed cost presence -As suggested by Baumol et al (1982), Gorman (1985), and Chavas and Kim (2007). The following indicators for fixed cost presence analysis were considered: Labor Availability Use: the percentage of labor available for productive activities in the period considered in scenario n; Land Availability Use: the percentage of land available for productive activities in the period considered in scenario n; Irrigation System Availability Use: the percentage of irrigation system available for productive activities in the period considered in scenario n; and Milking Structure Availability Use: the percentage of milking structure available for productive activities in the period considered in scenario n. Effects of transaction logistics costs -As suggested by Teece (1982).…”

“…Effects of local cost technical complementaritiesThey were considered as suggested by Baumol et al (1982), Gorman (1985), Leathers (1992), and Chavas and Kim (2007). For the calculation of technical complementarities associated with nutrient reuse, the total volume of animal waste produced throughout the time horizon and applied to vegetable crops in its two forms, solid (fresh manure) and liquid (slurry), had to be obtained.…”