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Department of Agricultural, Environmental, and Development Economics


On the Economics of Specialization: An Application to Agriculture

Oct 24, 2014, 10:30am - 12:00pm

Jean-Paul Chavas, Professor in the Department of Agricultural and Applied Economics at the University of Wisconsin-Madison, will present the VanBuren Seminar on October 24th in Room 105 of the Agricultural Administration Building (2120 Fyffe Road) as part of the AEDE Applied Economics Seminar Series. His presentation will focus on his recent research with Kwansoo Kim, Professor at Seoul National University in Seoul, Korea: "On the Economics of Specialization: An Application to Agriculture." 

The VanBuren Seminar is sponsored by The Fred N. VanBuren Professorship in Farm Management, which was established in 1985 by the Ohio State Board of Trustees through a bequest from the estate of Fred N. VanBuren. The funding supports the teaching of farm management at Ohio State for the benefit of both students and farm clientele of the University’s programs. 

Abstract: This paper investigates the microeconomics of specialization and its effects on firm productivity. We define economies of specialization as the productivity gains obtained under greater specialization. The paper shows how scale effects and non-convex technology affect economies of specialization. Using a nonparametric approach, we present an empirical analysis applied to Korean farms. The results indicate the non-convexity is prevalent especially on large farms. We find that non-convexity generates large productivity benefits from specialization on larger farms (but not on smaller farms), providing a strong incentive for large farms to specialize. We evaluate the linkages between non-convexity, firm size and management. 

The event is open to the Ohio State community and RSVPs are not required.