An Output Orientated Non Parametric Measure of Economies of Scope

Mario Fortin () and André Leclerc ()
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André Leclerc: GREDI, Université de Sherbrooke and GEREM, Université de Perpignan

Cahiers de recherche from Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke

Abstract: Economies of scope are present when producing jointly a diversified basket of goods and services is less costly than their separate production. Data Envelopment Analysis (DEA) can estimate economies of scope by the difference between input requirement sets of diversified and specialized firms and are applicable only when both specialized and diversified firms are present in the sample. We develop a measure of economies of scope to an output orientated DEA model even when the sample comprises only diversified firms, to obtain radial estimation of economies of scope. Our method puts in evidence that economies of scope are influenced by scale inefficiencies, and if these inefficiencies are left aside, diseconomies of scope are impossible.

Keywords: Economies of scope; DEA (search for similar items in EconPapers)
JEL-codes: C14 D24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff
Date: 2006

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http://pages.usherbrooke.ca/gredi/wpapers/GREDI-0622.pdf First version, 2006 (application/pdf)

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Persistent link: http://EconPapers.repec.org/RePEc:shr:wpaper:06-22

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