Will Transaction Costs and Economies of Scale Tip the Balance in Farm Size in Industrial Agriculture? An Illustration for Non-Food Biomass Production in Germany
Abstract
:1. Introduction
2. Conceptual Framework: Combining Arguments of Transaction Costs and Production Scale
3. Methodology
3.1. The Model
3.2. Data and Scenarios
4. Results
4.1. Scenario 1: Neutral-to-Scale Technologies
4.2. Scenario 2: Increasing Demand for Non-Food Biomass
4.2.1. Average Sectoral Effects
4.2.2. Effects for Farm Size Groups
4.2.3. Regional Effects for Different Ownerships Types
5. Discussion
6. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
References
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Scenarios and Assumptions | Estimated Production Functions | Adjusted Production Functions |
---|---|---|
SCENARIO 1: Neutral-to-scale technologies | Y = −2.77L0.50 S0.56 | Y = −2.45L0.67 S0.49 |
• Annual increase in factor productivity by 1% | ||
• Constant profit rate and output price | ||
• Hicks-neutral technology | ||
SCENARIO 2: Higher demand for non-food biomass | ||
• Annual increase in demand by 2% | ||
• Constant profit rate and product price | ||
• Constant factor productivity/technology | ||
2a: Average sectoral effects | Y = −2.77L0.50 S0.56 | Y = −2.45L0.67 S0.49 |
2b: Effects for farm size groups | ||
Group 1: <10 ha | Y = −3.47L0.53 S0.54 | Y = −8.41L1.35 |
Group 2: 10 ha–50 ha | Y = 4.54L−0.99S2.13 | Y = 21.49L−4.36S5.36 |
Group 3: 50 ha–100 ha | Y = 2.98L−0.89S2.12 | Y = S1.49 |
Group 4: 100 ha–200 ha | Y = L−0.35S1.7 | Y = L−0.33S1.64 |
Group 5: >200 ha | Y = S1.07 | Y = S0.81 |
2c: Regional effects for different ownerships types | ||
Western Germany | Y = 31.69L−0.7S2.47 | Y = −8.3L5.64S−4.82 |
Eastern Germany | Y = 38.44L−0.16S15.47 | Y = 16.59L−3.92S5.18 |
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Wen, L.; Chatalova, L. Will Transaction Costs and Economies of Scale Tip the Balance in Farm Size in Industrial Agriculture? An Illustration for Non-Food Biomass Production in Germany. Sustainability 2021, 13, 733. https://doi.org/10.3390/su13020733
Wen L, Chatalova L. Will Transaction Costs and Economies of Scale Tip the Balance in Farm Size in Industrial Agriculture? An Illustration for Non-Food Biomass Production in Germany. Sustainability. 2021; 13(2):733. https://doi.org/10.3390/su13020733
Chicago/Turabian StyleWen, Lanjiao, and Lioudmila Chatalova. 2021. "Will Transaction Costs and Economies of Scale Tip the Balance in Farm Size in Industrial Agriculture? An Illustration for Non-Food Biomass Production in Germany" Sustainability 13, no. 2: 733. https://doi.org/10.3390/su13020733