Economies of scale with aggregate data in Korean rice farms

Abstract

This study focuses on examining economies of scale for Korean rice farms with panel and group aggregate data from 1990 to 2013. Groupwise heteroskesasticity is considered in the translog cost function. Cost elasticities with respect to output range from 0.798 to 0.884 at the average level in reasonable farm size so that economies of scale is existed. However, the benefits from increasing farm size measured by logarithmic value of cost differences between farm size groups are decreased when farm size of 2.0~2.5 ha moves to that of 2.5~3.0 ha and even more.