Economies of scale and scope in Flemish secondary schools

This study estimates a multiproduct translog cost function for the entire population of 1011 Flemish secondary schools in order to determine the degree of ray and product specific (dis)economies of scale as well as the degree of (dis)economies of scope. Three types of schools and seven major study fields can be distinguished. Student loads in these study fields are used as outputs produced by the schools. Evidence is found for ray economies of scale for the three types of schools, even at output levels of 300% of the actual means. Although the cost elasticities of six out of seven outputs are close to zero, most of the values indicating the degree of product specific economies of scale are negative (suggesting diseconomies of scale). However, this can be explained by the considerable scope effects which are incorporated in the definition of the product specific economies of scale.     

Density and Integration Effects on Class I U.S. Freight Railroads

We investigate some technological aspects of railroading relevant to the debate on open access by estimating a multiproduct cost function with both operational outputs and infrastructure maintenance outputs. We find strong cost complementarities among operational outputs, but not between operations and infrastructure. The latter result implies that at the levels of output that characterize freight rail operations in the U.S. there may be no inherent technological advantages from vertical integration. The former suggests though (for reasons that we develop below) that competitive access alone will not necessarily lead to competitive outcomes in rail freight markets.     

Are sports teams multiproduct firms?

The appropriate conception of team outputs is investigated by estimating a two-output factor demand system for baseball teams, relative to which single-output models are rejected. This finding is robust to alternative approaches to testing and model choice. The factor demands are those of the symmetric generalized McFadden cost function, which has several advantages in this context. The team factor inputs are the skill characteristics of players, the prices of which are obtained hedonically. In addition to investigating one- versus two-output models, the estimation results are used to obtain demand and substitution elasticities, factor input elasticities with respect to output, cost elasticities, and measures of economies of scale and scope. Although the results support a multiproduct conception of team production, output separability is not rejected, suggesting that team outputs may sometimes be adequately treated as a production aggregate.     

Scale economies and existence of sustainable monopoly prices

The size of the firm relative to market demand is crucial to a determination of whether there exist sustainable monopoly prices. In the one product case the size of the firm is its minimum efficient scale. In the multiproduct case size is defined by a set of outputs at which cost complementarities are present. The analysis shows that when the size of the firm is sufficiently large, there exist anonymously equitable Aumann-Shapley prices. Further, at these prices natural monopoly is sustainable against rival entry. The Aumann-Shapley price are also shown to be quantity sustainable in the sense of Brock and Scheinkman.     

Why are firms sometimes unwilling to reduce costs?

This paper identifies the environments in which it does not pay for a multiproduct firm to engage in small cost reductions. Specifically, it shows that a multiproduct Bertrand firm’s profits will decrease in response to a small reduction in one product’s marginal cost if and only if the output share of the cost-reducing unit is below a threshold. Because cost reductions by a single-product firm or by a multiproduct Cournot firm always increase the firm’s profits, this result is unique to multiproduct Bertrand firms.     

The changing structure of cost and demand for the U.S. telecommunications industry

This paper formulates a multiproduct structural model to examine the evolution of the structures of production and demand and their dynamic interaction, over an extended period, 1935–1987, in the U.S. telecommunications industry. We estimate the degree of scale economies, cost elasticities, input price elasticities and the determinants of demand for outputs and for various factors of production. The contributions of the quasi-fixed inputs, such as R&D and physical capital, in the evolution of this industry are evaluated. A number of important issues like the changing characteristics of demand for and cost of local and toll services and the variation of price–cost margin over time are examined under different economic conditions, market structures and regulatory environments. We also analyze the effects of the 1984 divestiture of the Bell System on the cost structure, employment and capital formation of the U.S. telecommunications industry.     

Economies of scope and the scope of the enterprise

This paper examines elements of an efficiency-based theory of the multiproduct firm. The theoretical framework developed by Williamson to explain vertical integration is extended to explain diversification. The proposition is advanced that a cost function displaying economies of scope has no direct implications for the scope of the business enterprise. However, if economies of scope are based upon the common and recurrent use of proprietary knowhow or the common and recurrent use of a specialized and indivisible physical asset, then multiproduct enterprise (diversification) is an efficient way of organizing economic activity. These propositions are first developed in a general context and then examined in the context of diversification in the U.S. Petroleum industry.     

A Fourth Desideratum: The CES Cost Function and the Sustainable Configuration of Multiproduct Firms

For many parameter vectors, the sustainable configuration of an industry where multiproduct firms have CES cost functions fails to imply the existence of a multiplicity of multiproduct firms.     

The impact on Greek agriculture from membership in the European economic community

This paper estimates empirically the impact of Greek membership in the European Economic Community (EEC) on production, consumption, and trade of 18 major agricultural products of Greece. The model used combines the limited available data into a multiproduct supply and demand framework and quantifies the effect of transferring the EEC agricultural price structure on Greece. The basic results indicate that Greek farmers would lose substantially and their agricultural balance of trade seriously deteriorate, while Greek consumers would not be seriously affected as a consequence of EEC membership in 1986. Sensitivity analysis on several key assumptions and consideration of structural effects seem to support these conclusions.     

Opportunity Costs,Competition, and Firm Selection

Abstract

The paper questions the standard economic assumptions that competing economic agents have identical reservation utility levels, and that when differences in opportunity costs exist, they can be conveniently represented by fixed costs. Asymmetries in opportunity costs are considered in relation to current efficiency. The effect of this interchangeability of skills is studied in the context of the effect of entry on firm selection in a Cournot setting. It is found that inefficient firms are more likely to crowd out efficient ones when the relationship between current efficiency and opportunity costs is strong, and when the fixed costs of changing markets are high. Moreover, in the long-run, firms with intermediate cost levels are likely to induce the exit of low and high cost firms. The model sheds light on the benefits of diversification by multiproduct and multinational firms, and their relationship to skill transferability.     

Shadow directional distance functions with bads: GMM estimation of optimal directions and efficiencies

Because of its greater flexibility, the directional distance function (DDF) has been employed with increasing frequency to estimate multiple-input and multiple-output production, where inputs and outputs can be good or bad. However, typically researchers make three restrictive assumptions. First, they assume a direction of movement of firm production toward the frontier. Second, they assume that actual quantities of inputs and outputs are allocatively or price efficient. Third, they assume exogeneity of all inputs and all outputs, except for the normalized one. The first contribution of this paper is to include parameters to estimate optimal directions which correspond to the firm’s profit-maximizing (PM) position. The second contribution is to generalize the DDF to a shadow-quantity DDF. This entails adding distortion parameters to each input and output quantity of the DDF, creating shadow quantities. To estimate the shadow quantities and the structural parameters, we form the shadow DDF system, which includes the shadow DDF and all the first-order price equations from the shadow-PM problem. These include prices for bad inputs and bad outputs, where we approximate their missing prices for use in their first-order price equations. The third contribution is that we estimate the shadow DDF system using a Generalized Method of Moments approach, where all variables are potentially endogenous. This approach is simpler than the Bayesian one employed in Atkinson et al. (Estimating efficient production with bad inputs and outputs using latent prices and optimal directions. Working paper, University of Georgia, Athens, 2016), which estimated shadow prices and optimal directions. Using the same data set, both sets of results are qualitatively very similar, although they differ somewhat quantitatively.     

EXISTENCE AND UNIQUENESS OF AVERAGE COST PRICING EQUILIBRIA: A DEGREE THEORETIC APPROACH

This paper considers the issues of existence and uniqueness of average cost pricing equilibria within the context of a single, regulated, multiproduct monopoly with additively separable costs. We employ basic degree theoretic arguments to establish conditions under which an average cost pricing equilibrium exists. The degree theoretic approach permits the development of uniqueness results in a very natural manner.     

A Parametric Estimation of Bank Efficiencies Using a Flexible Profit Function with Panel Data

This paper generalises Kumbhakar's (1996a) single product shadow profit function to a multiproduct one, which in contrast to Berger, Hancock, and Humphrey (1993) is consistent with a firm's profit maximising behaviour. By estimating a parametric translog profit function, which does not require special assumptions about the error distribution, and using panel data from Taiwan's banking industry, the following conclusions can be drawn: (i) Parameter estimates from the translog functional form are more robust than those from the Fuss (non-logarithmic) form. (ii) More than half of all potential variable profits are found to be lost due to inefficiencies. (iii) Greater reduction in profit results from deficient output revenues than from a suboptimal input mix. (iv) The model finds technical progress during the sample period. (v) A type of 'weakly' optimal scope economies is detected, which suggests that the joint production of the two products can increase profits for some banks while not hurting the profits of others.     

Nature Reserves as a Bioeconomic Management Tool: A Simplified Modelling Approach

This paper demonstrates analytically how a nature reserve may protect the total population, realize maximum sustainable yield (MSY) and economic yield (EY) and how this depends on biological growth, migration, reserve size and economic parameters. The pre-reserve population is assumed to follow the logistic growth law and two post-reserve growth models are discussed to explore the importance of model assumptions for assessment of reserves. The post-reserve growth has either a common carrying capacity as in the pre-reserve case, or each sub-population has its own carrying capacity proportionate to its distribution area. A combined model, as a continuum of the two models, is also formulated and briefly discussed. Population protection against extinction is assured against low cost harvesting, including zero cost, when relative reserve size is greater than relative migration. Reserve size may be tuned to realize MSY in one model, but not in the other. Economic yield is generally greater in the former, but maximum EY cannot be realized in any one.     

Technological Change Bias In The U.S. Investor-Owned Electric Utility Industry Following Potential Deregulation

This paper estimates regulated and poientially deregulated costs of production for a multiproduct electric utility industry. The empirical evidence suggests technological regression with respect to costs in both regulated and deregulated environments. Analysis of factor cost shares indicates that technological change in a deregulated environment is expected to be less apital saving than technological change in the regulated environment. In addition, this study finds that overall diseconomies of scale may be nduced over time and to a greater extentunder deregulation than under regulation. Also, cost complementarities may be enhancedover time, but to a lesser extent under deregulation. Hence. tendencies toward natural monop oly may be increased or decreased by deregulation, and advancing deregulation may or may not be an appropriate policy.     

Are you being served? A general-equilibrium analysis of flexibility in production

In this paper firms may deviate from standard product specifications by investing in flexible production. In a two-sector general-equilibrium model that features consumer preferences with a desire for customization and in which the fixed cost of manufacturing production depend on the extent of flexibility chosen, we find that flexibility in production increases aggregate welfare. Moreover, we find that the symmetric equilibrium with positive (excess) profits welfare dominates the equilibrium with zero profits.     

论公司财务学假设

假设是公司财务概念框架的一个重要理论要素,财务学假设包括基本假设和具体假定两个层次。其中,基本假设又包括经济人、公司系合法虚构、资本稀缺性、零嵌入性、资本市场有效性、可持续发展、债权人权益得到保护、社会成本为零、现金流动制等假设。     

Unit versus Ad Valorem Taxes in Multiproduct Cournot Oligopoly

The welfare dominance of ad valorem taxes over unit taxes in a single‐market Cournot oligopoly is well known. This article extends the analysis to multimarket oligopoly. Provided all ad valorem taxes are equal and positive, unit costs are constant, firms are active in all considered markets, and a representative consumer has convex preferences, ad valorem taxes are shown to dominate in multiproduct equilibrium. Conditions exist, however, under which economic efficiency declines upon replacing specific taxes with ad valorem taxes that preserve output levels. We discuss the roles of unit cost covariances across multiproduct firms, and also of complementarity in demand, in determining the extent of cost efficiencies arising under ad valorem taxation. For goods that are complementary or independent in demand, conditions are found such that industry profits decline upon use of ad valorem taxes.     

Estimating an hedonic translog cost function for the home health care industry

Medicare home health care plays an important role in providing cost effective care for the chronically ill and elderly. Long seen as a cost effective substitute for nursing home care, home care has become even more important with expenditures increasing by 31.4% from 1990 to 1996. The purpose of this paper is to provide a short run cost analysis of a sample of home health care providers to gain insight into the efficient provision of home health care services. This paper is a significant improvement over previous studies in that it uses a nationwide database to more accurately represent the multiproduct nature of the industry and uses an hedonic translog cost estimation with desirable economic properties.     

How not to measure sustainable value (and how one might)

Sustainability is a complex multidimensional concept that entails economic, environmental, and social aspects. The sustainable value (SV) method developed by F. Figge and T. Hahn [Ecol. Econ. 48(2004) 173-187] is one of the most promising attempts to measure sustainability performance of firms. SV measures corporate contributions to sustainability by valuing resource use based on the opportunity cost, which must be estimated. This paper critically examines Figge and Hahn's estimator for opportunity cost, and shows that the proposed estimator rests on a number of strong, unrealistic assumptions. Evidence from Monte Carlo simulations conducted by authors shows that the proposed estimator performs very poorly even under ideal conditions. Having identified shortcomings in the SV method, we review some econometric approaches with a proven statistical foundation, which might be usefully applied in the present context.