Economies of scale and optimal capital in nuclear and fossil fuel electricity production

This paper tests for economies of scale in the electric utility industry using a five-year panel data set that includes both fossil fuel and nuclear fuel electricity generation. In addition, a variable cost function is used as opposed to a total cost function because the assumption of cost-minimizing production inputs is not met. That is, electric utilities are overcapitalized. Therefore, the optimal capital stock is estimated, which is significantly less than the actual capital stock, and an estimate of economies of scale is generated. Evidence suggests that firms are operating on the negatively sloped portion of the long-run average cost curve near the trough. This indicates either slight economies of scale or no economies of scale.     

Economics versus politics in trade policy

Do economies of scale contribute to our understanding of trade policy or is ideology and inequality sufficient? We develop a unified theoretical framework that encompasses both strategic economic and political variables deemed to be important in explaining trade policy. We predict that an increase in the scale effect leads to restrictive trade policies in labor-abundant countries and liberal trade policies in capital-abundant countries. Using cross-country data on economies of scale, ideology, inequality and various measures of trade barriers we confirm our predictions and establish that a unified framework, which incorporates economies of scale in production, performs better in explaining trade policy than existing political economy models.     

MULTI-PRODUCT COST ATTRIBUTES: A STUDY OF U.K. BUILDING SOCIETIES

A translog multi-product cost function is estimated jointlywith a derived input cost share equation to obtain estimatesof overall economies of scale and ‘augmented’ overalleconomies of scale for the United Kingdom building society industry.The ‘augmented’ measure takes into account inducedchanges in the number of building society branch offices asthe outputs vary. The parameter estimates are then used to computethe derivatives of the marginal costs of each product to testfor product-specific economies of scale and economies of scope.     

Impact of nontraditional activities on scale and scope economies: A case study of Japanese regional banks

The recent financial deregulation in Japanese banking has enabled regional banks to engage in trust businesses. This paper examines the impact of such nontraditional banking activities on cost structure by measuring economies of scale and scope. A generalized translog cost function, which can take zero outputs into consideration, is employed to simultaneously investigate entrants and non-entrants. While ray scale economies are observed for trust businesses, product-specific scale economies are not. Further, cost complementarities are not observed in almost all the pairwise combinations of the products. Thus, entering into the trust business yields no cost reduction for Japanese regional banks.     

COMPETITIVE ISSUES IN THE TAIWANESE BANKING INDUSTRY: MERGERS AND UNIVERSAL BANKS

This paper investigates scale economies and scope economies in the Taiwanese banking system, looking beyond the market‐power (MP) and efficient‐structure (ES) hypotheses. Given the existence of overall economies of scale and the positive value of expansion path sub‐additivity, we conclude that there might be large increases in profits following mergers. Moreover, since the profit‐structure relationship after financial reform is determined by the relative‐market‐power hypothesis, this consolidation trend will not necessarily decrease the social benefit for Taiwanese consumers. With regard to scope economies and product‐specific economies of scale, we are unable to recommend whether Taiwanese banks should develop as specialized banks or diversified banks in the future. Finally, we find that risk indicators play an important role in explaining the observed variation in bank profitability, and present evidence that default risk and leverage risk have negative effects on the profits of banking, although the effect of portfolio risk is uncertain.     

External economies of scale in the Lancashire cotton industry, 1900–1950

This article provides three types of evidence for external economies of scale in the Lancashire cotton industry. Anglo‐American productivity differences are used to demon‐strate external economies at the industry level. Econometric evidence of dynamic (Marshall‐Arrow‐Romer) external economies of localization in spinning and weaving is provided using individual earnings data. A case study of a merchant firm demonstrates the build‐up of dynamic (Jacobs) externalities of urbanization. It is argued that the persistence of a large merchant community generating external economies of scale helped to delay Britain's loss of comparative advantage to low wage producers.     

Scale and scope economies in Korean accounting firms around Sarbanes-Oxley regulations

This paper examines how scale and scope economies in accounting firms changed after Sarbanes-Oxley (SOX) regulations. Korea enacted SOX-type legislation to improve financial reporting quality in 2005. Our sample comprises 301 firm-year observations from 2002 to 2008. The sample period is divided into the pre-SOX (2002–2004) and post-SOX (2006–2008) periods. We estimate a multi-product translog cost function to determine whether significant changes occur in scale and scope economies during the pre- and post-SOX periods. Empirical results suggest that overall and product-specific economies of scale prevailed in accounting firms during the full sample, pre- and post-SOX periods. Accounting firms were less able to exploit scale economies in the post-SOX period. The marginal costs of producing Audit and Accounting (A&A) increased, whereas those producing Tax Services (TAX) declined. Cost complementarities existed only in jointly providing TAX and Business Advisory Services (BAS) during the pre-SOX years. In contrast, scope economies occurred in the joint production of A&A and TAX or TAX and BAS during the post-SOX period. Our analysis can be applied to the accounting industry in other countries that have adopted SOX-type regulations.     

中国制造业集聚经济特征与最优集聚问题——对112个三位数产业的实证研究

本文使用第三次工业普查的75万家企业数据,通过估计四个行业112个产业的生产函数,研究制造业的集聚经济特征、产业最优集聚规模及集聚水平的内生性问题。结果表明:集聚经济的存在形式为市级范围的本地化经济,省级范围的城市化经济虽然存在,但实际影响很小;企业层面规模报酬递减说明集聚经济更可能来源于城市经济理论所强调的技术外部性;随着集聚规模的上升,集聚经济呈先升后降的倒U型变化,各产业存在一个集聚效应最大化的最优集聚规模,但实际集聚规模普遍远小于最优集聚规模;与最优集聚规模相对应,以指数衡量的产业集聚水平也具有内生性。     

基于虚拟经济规模化效应的研究与对策

文章依据虚拟经济的特点,从银行、证券公司和开放式基金等三个方面,分析了虚拟经济规模化效应的存在性和可行性。通过数据和前人研究成果,论证了虚拟经济的规模经济效益,提出了我国虚拟经济规模化发展的对策和建议。     

Externalities,Cross-Sectoral Spillovers and Productivity Growth

We provide an interpretation of the productivity dynamics in the manufacturing sector based on the idea of the thick market externality à la Diamond. An econometric model has been estimated which allows to disentangle the long run effects of these trading externalities from those of internal economies of scale and of aggregate industry-level economies. The results obtained—based on a cointegrated system of non-linear-error-correction equations—confirm the hypothesis that the trading externality matters. Moreover, our findings point out that the emphasis generally posited both on internal and external economies of scale is not justified.     

Measuring returns to scale in nineteenth-century French industry

Were nineteenth-century French firms too small? Previous research has found either constant returns to scale throughout (Nye, 1987) or increasing returns to scale for most industries (Sicsic, 1994). This research sheds some light on these contradictory results by proposing and estimating a series of models that consider previously ignored econometric issues. My analysis of the 1839-1847 census suggests that there were increasing returns to scale for some industries and constant returns for others, while the analysis of the 1861-1865 census suggests constant returns to scale throughout. Assessing the economic implications of the estimated returns to scale, I argue that there were significant unexploited scale economies in the first half of the nineteenth century. In the second half of the nineteenth century, though, France had little to gain from scale economies.     

The British ‘failure’ that never was? The Anglo‐American ‘productivity gap’ in large‐scale interwar retailing—evidence from the department store sector1

Interwar British retailing has been characterized as having lower productivity, less developed managerial hierarchies and methods, and weaker scale economies than its US counterpart. This article examines comparative productivity for one major segment of large‐scale retailing in both countries—the department store sector. Drawing on exceptionally detailed contemporary survey data, we show that British department stores in fact achieved superior performance in terms of operating costs, margins, profits, and stock‐turn. While smaller British stores had lower labour productivity than US stores of equivalent size, TFP was generally higher for British stores, which also enjoyed stronger scale economies. We also examine the reasons behind Britain's surprisingly strong relative performance, using surviving original returns from the British surveys. Contrary to arguments that British retailers faced major barriers to the development of large‐scale enterprises, that could reap economies of scale and scope and invest in machinery and marketing to support the growth of their primary sales functions, we find that British department stores enthusiastically embraced the retail ‘managerial revolution’—and reaped substantial benefits from this investment.     

Production Costs,Scale Economies,and Technical Change in U.S. Textile and Apparel Industries

The elimination of quotas in textiles and apparel poses new threats from import competition. To survive, the sectors need to find least-cost methods of production. The production–cost structure of the U.S. textile and apparel industries is examined using a dual cost framework. A translog cost function is used to measure substitution elasticities between inputs, scale economies, and the nature of technical change. The scope for factor substitution in textiles remains limited with all substitution elasticities being less than unity. Labor and materials are complements in apparel production, but there is evidence of substitution between capital and labor. The rate of technical change is higher in textiles than in apparel. Given the intense import competition from low wage countries, in both industries, technical progress is labor saving. Overall, economies of scale are larger in apparel; however, scale economies have continued to increase in textiles.This research was supported by a grant from the National Textile Center.     

乡镇企业发展规模经济研究

乡镇企业产业组织结构的不合理和空间配置上的分散化导致了其发展的规模不经济，存在着多种积极溢出的损失和产能过剩。论文根据规模经济的层次性原理，研究了乡镇企业规模化发展中的产业组织创新和发展路径的多样性；并针对我国乡镇企业产业组织发展的现状，重点论述了构建企业集群是乡镇企业发展规模经济的当务之急。     

Estimation of Scale Economies Underlying Growth and Productivity: The Empirical Implications of Data Aggregation

Estimation of scale economies underlying growth and productivity patterns is typically based on aggregated data, raising questions about the potential for aggregation biases. This paper provides empirical evidence on the existence and patterns of such biases. We use a cost-based model to estimate short/long-run and internal/external scale effects for U.S. manufacturing data at different aggregation levels. Our results suggest that aggregation biases in such a model are not substantive. Also, internal scale economies seem more appropriately represented by the aggregate data, whereas more disaggregated data appears preferable for estimation of external or spillover effects that occur between industries or sectors.     

Economic Systems and Economic Growth

In a planned economy, state monopoly ensures that economies of scale are exploited. However, state monopoly could not commit to reward its workers. Anticipating this, individuals will exert less effort. In a market economy, competition among firms ensures that higher effort from workers will be rewarded. However, competition means that economies of scale are not fully exploited. Per capita output growth is generated by continuous adoption of new technologies substituting labor for capital. Growth rate in a market economy is higher than that in a planned economy when the incentive to exert effort is relatively more important.     

创新的规模经济与企业绩效——基于协同作用的考察

有许多因素导致企业的创新活动具有规模经济的特征,了解这些因素对企业管理者制定创新政策具有重要意义。理论上看,企业的广告活动有助于创新规模经济的实现,从而改善企业绩效。基于中国制造业上市公司样本的实证研究发现,从整体上看,研发支出与企业绩效显著正相关,广告支出与企业绩效没有统计上显著的关系,但广告支出有利于创新规模经济的实现。广告活动的协同作用会受到企业规模的影响,在中等规模企业里广告支出的促进作用比在大企业和小企业里从经济意义上看更为重要,并且统计上更为显著。     

MEASURING THE OPERATIONAL EFFICIENCY OF COMMERCIAL BANKS IN NAMIBIA

This paper examines the efficiency of commercial banks in Namibia using the standard econometric frontier approach. Although two aspects of efficiency (scale and scope) receive our attention, the emphasis is on the latter which pertains to whether a firm produces as efficiently as it possibly can, given its size. Our results indicate that substantial economies of scale exist in commercial banking in Namibia. This will tend to suggest that commercial banks in Namibia can increase their efficiency by increasing their current scale of operation. The results for scope economies show that the current level of input combination does not make for maximum efficiency as sufficient scope exists for a more efficient combination of inputs. We believe this will reduce operating costs in the industry and stimulate efficiency.     

Yardstick Cost Comparison and Economies of Scale and Scope in Japan's Electric Power Industry

This paper utilizes a fixed-effects model of panel data analysis and estimates the translog cost function of the Japanese electric power industry from 1978 to 1998. First, we investigate whether the Japanese electric power industry is naturally monopolistic. We find that all electric power companies still benefit from both scale and scope economies and therefore, this industry remains a naturally mono-polistic industry. Second, in order to apply the idea of yardstick-type competition to a naturally monopolistic industry where costs are quite different between companies, we introduce two kinds of cost-comparison coefficients, one for the individually specific effects and the other for scale and scope economies.     

比较优势、规模经济和贸易成本:国际生产分割下垂直关联产业的空间分布

在国际生产分工背景下,比较优势和规模经济成为影响企业生产区位的重要因素。本文在新经济地理框架下构建开放条件下理论模型,探讨不同贸易成本下比较优势和规模经济对垂直关联产业空间分布的影响。结果刻画出在比较优势和规模经济共同作用下,伴随贸易成本变化出现的4种垂直关联产业空间分布模式。表明我国目前所处的国际分工地位是在现有贸易成本条件下比较优势和规模经济相互作用的均衡结果,而吸引上游产业在中国聚集是实现我国产业结构升级的合理路径。