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What's wrong with the efficient scale?

from Greg Mankiw's Blog by Greg Mankiw
Reuters reports:
President-elect Barack Obama vowed on Tuesday to cut billions of dollars from wasteful government programs....An obvious example, Obama said, were reports of crop subsidies to farmers who make more than $2.5 million per year.
Like President-elect Obama (but unlike candidate Obama), I am all for getting rid of farm subsidies. But why would you want to use taxpayer funds to encourage large, efficient, profitable farms to break up into smaller, less efficient, less profitable farms? Isn't that precisely what you do if you maintain subsidies only for small farmers?

As all ec 10 students know, competitive markets push firms toward the efficient scale, defined as the level of production that minimizes average total cost. The low costs are in turn passed on to consumers in the form of low prices. These conclusions no longer hold true, however, if government policy tilts the playing field by rewarding small scale.
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