Economies of Scale in the Tunisian Industries

Almas Heshmati () and Ilham Haouas ()

No 5737, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: To date, empirical investigations of trade liberalization under the conditions of increasing returns to scale (IRS) and imperfect competition (IC) have either assumed or imposed the market and productive structures necessary for such a model. However, of the recent IRS/IC models used to simulate the effects of trade liberalization none have empirically tested for the presence of increasing return to scale prior to the analysis. With Tunisian data (1971-2004) and rigorous test procedures, we investigate evidence of IRS at the industry level. Using an econometric approach based on the estimation of the translog cost function and its associated cost share equations, we identify the sectors characterized by increasing returns to scale. Analysis of the results shows that specification of the model is sensitive to inclusion of time trend representing technology. The model accounting for technology did not fit the data well for most sectors. The estimation results without time trend interactions are different. Here most of the sectors show signs of increasing returns to scale.

Keywords: new trade theory; trade liberalization; economies of scale; Tunisian industries; cost functions (search for similar items in EconPapers)
JEL-codes: C32 C52 D24 F12 L00 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-05
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: International Journal of Economics and Finance, 2013, 5(1), 48-64.

Downloads: (external link)
https://docs.iza.org/dp5737.pdf (application/pdf)

Related works:
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:iza:izadps:dp5737

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().