Analysis of economic benefits resulting from scale and optimal size in Tehran province\'s poultry firms

Size and exploiting scale-economies are decisive factors in optimal use of inputs in the firms. Therefore, in attempt to assay the existence of scale-economies in poultry industry the required data were collected from 70 poultry firms of Tehran province in 2007. The estimate of the translog cost function results in determining the decisive factors in firms' production costs which consist of feed and pullet prices, labor salary and production amount of egg. With estimating the cost and scale elasticity it has been found that 94% of the study firms could have been exploiting the economic of Size. Minimizing the translog average cost function results in pullet optimal size of approximately 62000 heads. Thus, the poultry industry can reduce the production average cost by increasing the production scale approach to the optimal size and improve production economic procedure by increasing their profitability.

JEL Classification: D21