Factor Intensity and Site Geology as Determinants of Returns to Scalein Coal Mining

Gale Boyd

The Review of Economics and Statistics, 1987, vol. 69, issue 1, 18-23

Abstract: Increasing returns to scale (RTS) is frequently po stulated as affecting productivity in surface coal mining. However, it is not cl ear whether increased capital intensity or increased output is the relevant phen omenon. A ray-homothetic production function that incorporates the capital labor mix and fixed site geology into the scale elasticity is presented and estimated with a micro (mine level)dataset. The results indicate that higher capital int ensity contributes to higher RTS for some types of capital equipment, but not al l. On the average, increasing RTS was found, with few mines approaching optimal scale. Copyright 1987 by MIT Press.

Date: 1987
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