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A MODEL OF OPTIMAL PLANT SIZE WITH AN APPLICATION TO THE DEMAND FOR COGNITIVE ACHIEVEMENT AND FOR SCHOOL SIZE
Author(s) -
KENNY LAWRENCE W.
Publication year - 1982
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1982.tb01154.x
Subject(s) - rural area , economics , quality (philosophy) , cognition , econometrics , agricultural economics , psychology , medicine , philosophy , epistemology , pathology , neuroscience
A model of optimal plant size is developed which predicts that 1) plants experience increasing returns to in‐plants inputs, 2) the relative price of plant output is greater in rural areas than in urban areas, and 3) plants are larger in urban areas than in rural areas. The model's predictions appear to be consistent with behavior in a number of consumer services (e. g., grocery, movie, and library services). These predictions are more rigorously tested and are strongly supported when demand functions for cognitive achievement and for school size are estimated. These regressions also lend support to the quality‐quantity model of fertility.