Growth and size economies over space and time: wheat-sheep farms in New South Wales

Abstract

Time series and cross-sectional data for 18 years on 26 N.S.W. wheat-sheep properties are combined to test whether farms that grew in size over time reaped the postulated size economies derived from the cross-sectional statistical cost functions. Realized economies of farms that remained in the industry and changed in size during the 18-year period were found to be significantly greater than measured potential economies from 'static' cost functions would have suggested. The 'dynamic economies of growth' differed significantly amongst farms indicating there was no single economy of size curve along which farms moved