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Abstract
Plants in agricultural marketing and processing industries, generally speaking, function in
an imperfectly competitive environment and therefore do not necessarily face perfectly elastic
supply functions for inputs, or perfectly elastic demand functions for outputs. Relevant
coefficients in cost functions of such firms often are dependent on supply as well as production
coefficients. Indeed, in contrast to farm production, here the more interesting relationships
may arise from price functions rather than production functions. Determination of reliable
cost-function estimates under such conditions presents a real challenge to researchers. The
accompanying discussion of the estimation of empirical cost functions in such firms is published
as journal paper number J-2860 of the Iowa Agricultural Experiment Station, Ames,
Iowa, project number 1224.