Joachim G. Elterich

Dynamic Measures of Scope and Scale Economies: An Application to German Agriculture

Static concepts of multiproduct economies of scale and scope are extended into a dynamic setting within the cost of adjustment framework. Important properties of the dynamic measures are developed and the foundations of a dynamic theory of the firm generalizing static neoclassical theory are presented. Dynamic measures of scope and scale as well as shadow costs are estimated empirically for multiple-output, multiple-input German dairy farms operating under a production quota. Causes of scope economies are explored and a conceptual model to predict the evolution of the production structure of German farms is formulated.

Unemployment Insurance, Estimated Cost Rates, Benefits, and Tax Burden by Type of Farm

Unemployment insurance cost rates for newly covered employers and the corresponding tax burden under two sets of tax structures by type of farm are estimated by state. Livestock, dairy, and poultry farmers generally more than support the benefits their workers receive, which is not the case for fruit and vegetable farms. Under experience rating livestock and dairy farms tend to pay the minimum rate in half the states, while the maximum rate applies for fruit and vegetable farms in many states. Benefits received by workers vary also by type of farm and state and tend to be related to the cost rate.

An Optimal Control Framework for Inter-regional Dairy Policy Analysis

An eleven-region stochastic coefficient econometric model was estimated and used in an optimal control framework to evaluate the effectiveness of the dairy price support program and marketing orders in reducing and stabilizing government purchases of dairy products. The results showed significant pressure on the reduction of the support price both in the presence and absence of Class I differentials. The optimal control model also showed that the drop in price support levels did not dramatically alter the regional distribution of milk production.