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Economies of scale in dairy marketing cooperatives in Kenya

✍ Scribed by Ellene Kebede; Dean F. Schreiner

Publisher
John Wiley and Sons
Year
1996
Tongue
English
Weight
656 KB
Volume
12
Category
Article
ISSN
0742-4477

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✦ Synopsis

This study estimates technical eficiency and scale economies for sample dairy marketing cooperatives in the Riji Valley of Kenya. The maximum likelihood technique was used to estimate a stochastic cost frontier function to determine technical eficiency and scale economies. The estimated long-run average cost curve in.dicates scale economies, but most of the scale economies are exhausted for the average size of the cooperatives in the sample. The test for scale elasticity was sign&cant at the 10% probability level. Results indicate that cooperatives are technically eficient for the observed technology. Cooperatives can reduce unit costs by expanding volume of milk handled, either through existing members or new members, including merging with other cooperatives. 0 1 996 John Wiley & Sons, Inc.

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