SOUTHERN JOURNAL OF AGRICULTURAL ECONOMICS DECEMBER, 1974 PRODUCT COMPLEMENTARITY IN PRODUCTION: THE BY-PRODUCT CASE*

The product-product relationship has been a A CRITIQUE OF THE TRADITIONAL FORMAT traditional subject of most production economics and farm management courses for the past two decades. The usual treatment of by-products as one case Although the traditional examples of of product-product complementarity is deficient asa product-product optimization have come primarily conceptual basis for the important resource allocation from the agricultural production sector (e.g., problems posed by by-products. This deficiency, legume-corn rotations and crop-livestock whichreduces the pedagogical and empirical viability combinations), the concept is useful in analyzing the of the framework, arises for a number of reasons. organization of any multi-product firm-including F i r s t, t h e t r a d i t i o n a 1 those firms which produce externalities in the form rate-of-product-transformation approach and its of environmental degradation. attendant mono-periodic and constant-outlay Three concepts or ideas usually are offered as assumptions are ill-suited for the by-product case. For giving rise to a positively sloped or complementary complementarity to arise from byproduct, range on the product transformation surface-(l) one phenomena, the usual assumptions regarding fixity of production process uses as an input a by-product of the resource base and simultaneous productio