An Economic Analysis of Technology in the Meat Products Industry

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Abstract
A nonhomothetic cost function allowing for variable elasticities of scale and substitution and neutral, as well as factor‐using, technical change is estimated for the meat products industry. Empirical results suggest that over the period 1972–76 this industry was characterized by increasing returns to scale. The nonhomothetic and nonneutral specification implies that returns to scale and the rate of technical progress are significantly affected by factor price changes and the level of output. Higher labor prices lead to greater scale economies and to greater cost reductions through technological advances.

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