A dual measure of economies of scope

A derivative-based measure of economies of scope is obtained by exploiting the duality between the shadow cost function and the input distance function. This is a useful measure when the econometric estimation of a cost function is not viable.     

A semiflexible normalized quadratic inverse demand system: an application to the price formation of fish

We propose a new inverse demand system, the normalized quadratic distance function, which is similar to the normalized quadratic expenditure function of Diewert and Wales (1988a). Aside from being able to maintain concavity in quantities globally, the resulting specification is also `flexible.' In addition, to obtain more parsimonious specifications, we apply the rank reduction procedures of Diewert and Wales (1988b) to the model's Antonelli matrix. We illustrate the techniques by estimating a system of inverse demands for bi-monthly fish landings, 1971–1991, for U.S. Great Lakes ports. To illustrate the model's usefulness, exact welfare measures associated with catch restrictions are derived. First version received: May 1999/Final version received: November 2000     

Diversification strategies and scope economies: evidence from a sample of Italian regional bus transport providers

A growing number of Local Public Transport (LPT) companies diversify their production lines by providing a large set of services. We investigate the cost structure of a sample of LPT companies operating in Italy and assess the presence and the magnitude of scope economies. We split the whole sample of firms according to their diversification strategy: private firms, mainly diversifying in competitive transport related services and public firms providing nontransport services in regulated markets. Scope economies appear sizeable for both groups but higher for firms pursuing a transport related strategy, suggesting caution in the multiutility development pursued by public LPT firms in Italy.     

Economies of scope and scale in the Norwegian electricity industry

An important issue for multi-product firms to consider is economies of scope, i.e., whether there is any benefit from producing two or more products, or whether specializing in producing only one product would be less costly. We examined the economies of scope for Norwegian electricity companies because policy makers have decided to force companies that both generates and distributes electricity to split their operations into two companies, one engaged in generation only and the other in distribution only. We set out to test the validity of the policy makers decision on unbundling generation and distribution. Using data from Norwegian electricity companies for the period 2004–2014, we found evidence of economies of scope, meaning that policy makers’ insistence on separating generation and distribution companies will have increased costs. We also found evidence of economies of scale, meaning that there are cost savings in expanding outputs. Our findings provide important information to consider in future policy decisions in the Norwegian electricity industry, probably with implications for other countries.     

我国财产保险公司范围经济效应的实证检验与真伪性分析

我国自1996年实施产寿分业经营以来,保险公司数量急剧增加,财险业务中车险的比重不断上升,呈现出“一险独大”的市场状况。运用超越对数成本函数,对国内20家具有代表性的财险公司2005-2012年的范围经济状况进行检验发现,以保费为基础的检验结果与以总资产为基础的检验结果存在着很大差异,意味着我国财险公司的范围经济效应存在着“真伪性”。对此,通过对财务数据、业务结构、业务规模等数据的分析,鉴别了我国财险公司范围经济效应的“真、伪”性。     

Scope economies and technical efficiency of cocoa agroforesty systems in Ghana

A number of studies have addressed issues relating to the physiological, environmental and economic values of trees in cocoa farming systems. However, to date, little has been done to quantitatively examine the effect of crop diversity on cocoa farming efficiency. This study therefore sets out to first investigate whether and to what extent crop diversity (defined as the mixing of cocoa with other crop species on farmers' plots) affects productivity on cocoa farms. Secondly, it sought to establish whether there are economies of scope (i.e., cost complementarities) from the sharing of farm inputs by crops on the same plots. Our results indicate that diversified (i.e., multi-crop) cocoa farms are more efficient than single (i.e., mono) crop farms. Furthermore, our estimate for the economies of scope parameter indicates possibilities for cost complementarities between production of cocoa and other crops on the same plot. We advocate further investigation on the issue of scope economies to determine which crop combinations offer better cost complementarities and also meet biodiversity conservation objectives.     

Choice of the empirical definition of zero in the translog multiproduct cost functional form

The translog cost function is valuable to researchers for empirical analysis in themodelling of indirect cost and profit functions. A flaw of the functional form is in themodelling of zero output values. This study examined the impacts of empirical definition of zero output values on price elasticities, economies of scope and scale, using the translog cost function. Estimation of a system of cost and factor share equations with regularity condition imposed was conducted. Results show that the choice of default values affects policy recommendations.     

Economies of density, scale and scope in the water supply and sewerage sector: a study of four developing and transition economies

Using panel data, we estimate measures of density, scale and scope economies in four countries that differ substantially in their levels of economic development and in their piped water and sewerage coverage: Brazil, Moldova, Romania and Vietnam. We find evidence of economies of scale in Moldova, Romania and Vietnam. In Brazil, we cannot reject the null hypothesis of constant returns to scale. The results of this study show that the cost structure of water and sewerage utilities varies significantly within and between countries and over time.      

Patterns of technical change: a geometrical analysis using the wage–profit rate schedule

In this paper we examine some basic stylized facts of economic growth according to the modern restatement of the classical theory of income distribution. In particular, we make use of a wage–profit frontier in order to explore the patterns of technical change experienced by a set of 18 industrialized economies, during the last 40 years. Our main purpose is to document the evolution of technical change. Using empirical evidence from the Italian industry, we also make an attempt to provide an explanation to data from a classical perspective, alternative to the standard approach founded on the aggregate production function.     

Direct causal mechanisms of profit: dominant paradigm of profit seeking

This paper develops the direct causal mechanisms of profit (DCMP) to meet the conditions/requirements normatively drawn from the conceptual, logical and methodological dimensions of profit seeking, direct causal mechanisms, holistic and non-egalitarian approach, and deductive inference, which holds the proximate causal mechanism between technological change and needs evolution at the macro-foundations, and the ultimate causal mechanism between needs-focused innovation and explicit needs at the micro-foundations. From DCMP it derives propositions about matching goodness of the proximate causal mechanism and adaptive goodness of the ultimate causal mechanism, verifies them with the experiences of the winners/losers, and finally concludes that DCMP can work as the dominant paradigm of profit seeking, the determinants of firm/business success, and a powerful theoretical and practical foundation/framework for business model design and innovation, asserting that DCMP explains profit as outcome/effect in a more robust/comprehensive/persuasive manner than the existing paradigms because DCMP always guarantees the genuine causality.     

Estimating the cost of equity for private firms using accounting fundamentals

Finance literature suggests the use of the Accounting Beta (BACC) as a proxy for the Capital Asset Pricing Model (CAPM) market beta to estimate the cost of equity capital when the stock price is not available. Previous researchers have aimed to achieve this objective by determining the correlation between accounting variables and the market beta. However, the magnitude of the resulting error in this correlation has remained unknown. The current study is an attempt to test the performance of the BACC as a proxy measure for the market risk and to examine the extent of the statistical error in the correlation between these two measures. Our findings indicate that BACC overestimates the market beta by between 20% and 50%. Applying some corrective measures, such as operational earnings scaled by equity, may lessen this difference to a range of 22%–25%; however, it does not eliminate the error. Our output also suggests that the BACC might be biased when used to assess the risk of small firms.     

Estimating the household consumption function in Saudi Arabia: an error correction approach

ABSTRACT

We estimate a micro-founded life-cycle consumption model for Saudi Arabia over the period 1970–2017 using error correction model procedures. Dynamic adjustments are significant, and both income and wealth are found to have significant effects, with a long-run marginal propensity to consume out of the income of 0.95 and out of the wealth of 0.06. The sensitivity of consumption to income and wealth, as well as the estimated short-term effects of price and real interest rate, are consistent with the rapidly growing Saudi economy. By capturing the key determinants of the life-cycle model, our approach is useful for the design of macroeconomic policy. We estimate the impact of the recent VAT reform.     

Estimating a monetary policy reaction function for the dominican republic

Abstract

The paper specifies and estimates a hybrid McCallum–Taylor monetary policy reaction function for the Dominican Republic (DR). The estimated reactions suggest that the Central Bank of the DR has been biased towards targeting the exchange rate. These findings are in line with the evidence on the fear-of-floating characteristic of developing countries. An evaluation of the estimated rule's historical performance shows that monetary base growth below (above) that implied by the ‘average’ policy reaction is associated with better (worse) macroeconomic performance.     

我国上市公司的投资行为研究:基于新古典理论的检验

从新古典投资理论出发,通过研究我国上市公司投资行为对资本成本的响应程度以及企业投资规模与利润水平的关联程度,笔者发现:(1)我国上市公司的投资行为总体上符合新古典经济理论所期望的利润最大化目标下的企业投资行为范式;(2)由于存在较大的资本存量调整成本,新古典经济理论倡导的干预投资的经济政策对我国企业的投资行为在长期内会发生调节作用,但短期内的作用非常有限。     

Modeling of the national economies in state-space: A fractional calculus approach

A new approach to macroeconomic modeling is presented and illustrated by an application to modeling the behavior of national economies of the three Commonwealth countries. The developed approach is based on three essential modern tools.     

Estimating the true cost of living for households with different incomes using data from Taiwan

This empirical study investigates why the true costs of living for different income groups in Taiwan as measured by the superlative Törnqvist price index have grown dissimilarly over the sample period. Specifically, it shows that using the aggregate Cost of Living (COL) estimates for the entire households as is commonly practiced would produce noticeable group bias effect in measurement. Also the magnitude of the commodity substitution bias in the conventional Consumer Price Index (CPI) is found to be positively related to household income in general. Because of the presence of these two biases, the true COL for households belonging to the two ends of the income spectrum is found to be over-estimated. This article is therefore in full agreement with Arrow's proposition that an alternative and separate set of price index be constructed.     

Strategy-proof and individually rational social choice functions for public good economies: A note

Summary. Serizawa [3] characterized the set of strategy-proof, individually rational, no exploitative, and non-bossy social choice functions in economies with pure public goods. He left an open question whether non-bossiness is necessary for his characterization. We will prove that non-bossiness is implied by the other three axioms in his characterization. Received: October 17, 1997; revised version: January 19, 1998     

General equilibrium effects of environmental policy: A CGE-modeling approach

Estimation of emission control cost functions is often carried out in a partial equilibrium framework, i.e., under the assumption that emission control measures have negligible effects on input and output prices. In this paper a computable general equilibrium model is used for simulation of the impact on factor prices and resource allocation of reductions of SO _infx ^sup- , NO _infx ^su- and CO₂-emissions. Thus the model includes markets for tradable emission permits, and the equilibrium prices of permits reflect the marginal costs of emission control. The results suggest that major emission reductions are likely to have general equilibrium effects, and thus that emission control cost functions that fail to take these effects into account may give a distorted picture of the economic impact of emission control.     

我国商业银行规模经济评价方法研究

现有的关于银行规模经济评价的理论,要么基于参数法,要么专注于非参数法,很少有将二者兼顾考虑的评价方法.本文在充分考虑参数法和非参数法利弊的基础上,针对我国商业银行的特点提出了分类规模经济评价的思想.同时在利用DEA方法获得生产可能性集前沿面的基础上,建立了通过拟合生产函数获得各种规模经济评价指标的方法.     

Estimating potential output and the output gap for the euro area: a model-based production function approach

This paper provides an analysis of multivariate unobserved components models for the estimation of potential output and the output gap in the euro area. Bivariate models of output and inflation and multivariate model-based implementations of the production function approach are considered; according to the latter potential output is derived from the permanent components of the factors of production consistent with stable inflation, whereas the output gap results from the combination of the transitory components. This approach allows to measure the contribution of the various factors of production to potential output growth, and to assess the reliability of the output gap estimates. Various alternative statistical specifications for the separation of trend and cycle are considered entertaining different economic hypotheses. The paper also provides an assessment of the reliability of the alternative output gap estimates and analyses their predictive validity by means of a rolling forecast exercise that provides an evaluation of the capability to forecast future inflation. A preliminary version of this paper appeared as EUI working paper ECO2002/09 and was presented at the European Central Bank, the European University Institute, the Growth and Business Cycles in Theory and Practice conference, Manchester UK, 20–21 June 2002, the Common Features in Rio conference, Rio de Janeiro, 29–31 July 2002. We thank the participants, Michael Artis, Gerard Korteweg, Geoff Kenny, Neale Kennedy, Manuel da Mota Freitas Martins, Gerard Ruenstler, and three anonymous Referees for useful discussions and valuable comments. The paper was largely written while the first author was acting as consultant for the ECB. The views expressed in it do not necessarily reflect those of the ECB. All correspondence to Alberto Musso.