A Dual Measure of Economies of Scope
Gholamreza Hajargasht (rhajargasht@swin.edu.au),
Timothy Coelli and
D.S. Prasada Rao (d.rao@uq.edu.au)
No WP032006, CEPA Working Papers Series from University of Queensland, School of Economics
Abstract:
Information on the economies of scope (or cost complementarities) between two or more output variables is traditionally obtained from the second derivative properties of an econometrically estimated multi-output cost function. However, in some instances the econometric estimation of a cost function may not be viable, because cost or input price data are not readily available or because the assumption of cost minimising behaviour is not appropriate in the industry at hand, perhaps due to government ownership or regulatory controls. In this paper we address this issue by utilising the duality between the cost and input distance functions in deriving an expression for a measure of economies of scope in terms of the derivatives of an input distance function. We derive expressions for the special cases of the CES and translog functional forms, and then provide an empirical illustration using sample data on Australian aged care facilities, an industry which is currently undergoing a major pricing and regulatory review. Our empirical results indicate that there is some evidence for existence of economies of scope between high care and low care patients, a result which is of particular interest to policy makers in this industry.
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (4)
Downloads: (external link)
https://economics.uq.edu.au/files/5076/WP032006.pdf (application/pdf)
Related works:
Journal Article: A dual measure of economies of scope (2008) ![Downloads](/downloads_econpapers.gif)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:qld:uqcepa:22
Access Statistics for this paper
More papers in CEPA Working Papers Series from University of Queensland, School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by SOE IT (soe-it@economics.uq.edu.au).