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Scale Economies and Consolidation in Hog Slaughter: Comment
Author(s) -
Wohlgenant Michael K.
Publication year - 2001
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/0002-9092.00233
Subject(s) - citation , consolidation (business) , library science , state (computer science) , sociology , economics , computer science , algorithm , finance
In a recent article, MacDonald and Ollinger (MO) estimate cost functions of hog slaughtering plants. While the estimates they obtain provide useful information about scale economies and consolidation in hog slaughter, incorrect inferences are drawn about substitutability (and lack thereof) between hogs and other inputs in processing pork. The purpose of this comment is to derive the correct measures of input substitutability and to show that the error in using the Allen elasticities of substitution to draw inferences