Cost function analysis of fruit and vegetable processing in an Oregon cooperative Public Deposited

http://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/3197xp46g

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  • A cost function characterizes a firm's cost-minimizing behavior. It is defined as a function of the level of outputs produced and the prices of factors which enter the production process. Econometric estimation of a cost function allows one to test hypotheses regarding the structure of cost and the structure of the underlying technology. Cost function structure is indicative of production structure, namely, the relationships among factors and products involved in the production process. In this study, the method of maximum likelihood is used to jointly estimate a cost function and labor share equation for a cooperative vegetable processing firm. The study concentrates on labor and energy inputs and on green beans, sweet corn, and an aggregate of other fruits and vegetables. Hypotheses of nonjointness in output prices (no factor substitutability) and nonjointness in inputs (no output complementarity), and a third hypothesis regarding regulation of raw product delivery quantities, are tested at the sample mean. Measures of conditional price elasticities of input demand, cost complementarity, and cost elasticity are derived from the estimated model.
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