Investigation of economies of size in rice paddies of Guilan province

small lands are very common in rice farms, which, as economists believe, leads to the lack of optimal use of production resources and consequently increases production costs of rice and its price. Therefore, empirical investigation of economies of size in rice farms is very important for reducing production costs. To achieve purpose of the present study, data on rice production and its costs were collected from 180 farmers in four cities of Guilan province for the 2019-2020 crop year. Using Duality's theory, the cost function and demand functions estimated in three flexible functional forms namely Translog, Normalized Quadratic, and Generalized Leontief. Based on the estimated parameters of the best model, the elasticity of the size was estimated. As well, average cost function of rice production was estimated and based on it, the elasticity of the average cost with respect to the production was calculated.The results show that Translog functional form is the most suitable form for the expression of rice production technology in Guilan province. Results show that structural parameter of “Return to Size” for paddy farms is equal to 1.33 in average and is greater than one for all the observations. As well, elasticity of average cost relative to production is negative for all the farmers. Therefore, estimated models prove the advantage of economies of size and negative slope of average cost function in all rice farms . So, there is no any farm with efficient size in the studied sample and it is possible to reduce the production costs and the cost price of rice by increasing the size of production for all the farms. based on the findings of this research, land integration policies and increasing the size of rice paddies are suggested as an effective strategy to reduce production costs of rice production.