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Retail fertilizer plants produce a number of products and services. To analyze the relationship between cost and output for these multiproduct firms, a short‐run, translog cost function is estimated using pooled data. Measures of economies of scope and scale are calculated. Results indicate plants can lower average cost by increasing output and by diversifying into anhydrous ammonia. Furthermore, preliminary evidence indicates that firms in the sample are overinvested in plant and equipment.
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Akridge et al. (1986) studied this question.
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