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Allocable Fixed Inputs as a Cause of Joint Production: A Cost Function Approach
Author(s) -
Leathers Howard D.
Publication year - 1991
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 - 10.2307/1242436
Subject(s) - diseconomies of scale , production (economics) , joint (building) , economics , fixed cost , function (biology) , short run , production function , microeconomics , scope (computer science) , computer science , economies of scale , architectural engineering , programming language , evolutionary biology , engineering , biology
The multiproduct cost concepts of Baumol, Panzar, and Willig are used to explore the contention of Shumway, Pope, and Nash that allocable fixed inputs cause joint production. Allocable fixed inputs may create an interdependence in the short‐run cost function when none exists in the long run; however, this will not necessarily lead to joint production. For joint production to occur in the short run, either the short‐run cost function must exhibit economies of scope, or stand‐alone production of one of the commodities must exhibit diseconomies of size. The issue of whether allocable fixed inputs cause joint production is an empirical question.