Nonparametric Evaluation of Economies of Scope in the Context of Technical Efficiency: The Case of Rice and Vegetable Farms in Korea

This paper provides a nonparametric evaluation of economies of scope in the context of technical efficiency allowing for non‐convexity, with an application to Korean rice and vegetable farms. Relying on non‐parametric‐free disposal hull and data envelopment analysis approaches and input–output data for rice and vegetable farms from the Korea Farm Household Economy Survey data collected in 2007, this article examines technical inefficiency and its decomposition under non‐convexity and convexity. Empirical measures of technical inefficiency and its decomposition results are provided, with a focus on a component of technical inefficiency associated with economies of scope (i.e. diversification benefits) under non‐convexity in production technology. The decomposition measures of technical inefficiency include pure technical inefficiency, size inefficiency and diversification inefficiency. The results provide empirical evidence supporting size‐dependent diversification strategies, where benefits of diversification are larger for small farms on average compared to those of large farms.     

Domestic Market Structure and Performance in Global Markets: Theory and Empirical Evidence from U.S. Food Manufacturing Industries

This paper formally articulates Porter's hypothesis that the degree of competition in domestic markets is positively linked to performance in international markets. Hypotheses are tested using measures of the trade performance of U.S. food manufacturing industries as proxies for international competitiveness. Empirical results are generally consistent with Porter's hypothesis; net export share is negatively related to industry concentration. The competitiveness of agricultural inputs, R & D intensity, and trade barriers of other countries were also found to be important determinants of the performance of these industries in global markets.