on the estimation of hospital cost functions abstract data from 166 general hospitals in new york state 1981 is used to estimate a quadratic and logarithmic long run cost function both equations fit the data very well but give very different results the quadratic appears to confirm the commonly held view of a shallow u shaped average cost curve whereas the log function indicates significant economies of scale a total and average cost elasticity of 0 9 and 0 10 respectively using beds or patient days to measure output ramsey s reset test is used to discriminate between the two models and the quadratic is clearly rejected as a misspecification scale economies thus exist even where the usual quadratic suggests otherwise

multiproduct short run hospital cost functions empirical evidence and policy implications from cross section data economists and policymakers have been interested in hospital costs and the structure of hospital technologies for several decades now early interest was focused on the possibility of scale economies which implied increased efficiency for larger hospitals 6 8 12 13 18 20 while more recent interest has been stimulated by the inflationary spiral of hospital costs 1 15 17 22 as hospital costs have risen important policy questions concerning the impact on costs of the hospitals diagnostic case mix the hospitals admitting physicians the hospitals size and the hospitals efficiency have emerged and researchers have attempted to deal with these issues within the context of increasingly complex econometric models 1 2 5 24 27 however in attempting to analyze these important policy issues researchers have been forced to make two major types of compromises on the one hand appropriate data are often not available for estimating a well specified cost function e g information on admitting physicians and diagnostic case mix are often missing so that problems of specification error often plague the econometric results conversely in using imaginative ways to deal with data problems e g weighting in patient and out patient care to form a single index of hospital services 1 27 or estimating separate cost functions for each department in the hospital 2 researchers sometimes place unrealistic and unnecessary constraints on their econometric models the purpose of this study is to analyze the impact of several of the primary hospital characteristics mentioned above on the short run costs of hospitals within a theoretically consistent framework in the following discussion we also develop the theoretical

measuring economies of diversification a frontier approach the purpose of this article is to improve the statistical analysis of multiproduct firm behavior specifically we are interested in modeling and estimating multiproduct technology focusing on size and product line variation thus we offer a new empirical technique that can be used to directly analyze issues such as subadditivity expansion path subadditivity economies of scope and economies of diversification although applied papers employ a wide variety of theoretical multiproduct cost concepts previous work uses nonfrontier estimation techniques we show how to introduce frontier approaches to multiproduct cost analysis that can be applied to any of these concepts and improve the statistical analysis specifically we introduce an empirical test using frontier techniques that allows for direct measures of economies of diversification at the firm specific level

the transformation of the indian agricultural input industry has it increased agricultural r d indian agricultural input industries have gone through a major transformation in the last 40 years state owned firms grew during the green revolution and then stagnated or declined indian corporations that were protected from foreign competition are now exporters of agricultural tractors and pesticides foreign multinational corporations are rapidly increasing their role in the seed pesticide and tractor industries entry by large indian firms and multinationals has increased competition in the input industries private agribusiness r d in india grew from 23 million in 1985 to 250 million in 2009 in 2005 us dollars this is the same time period as a transformation in the agricultural input industry rapid growth in demand for agricultural inputs breakthroughs in information technology and biotechnology and changes in intellectual property rights an econometric model was used to test whether the transformation of agricultural input industry was a major factor in the growth of r d expenditure or not this article analyzes a unique firm level sales and r d data set from the seed pesticide tractor and fertilizer industries in 2000 2009 the estimated model indicates that agribusiness firms r d expenditures from 2000 to 2009 were positively related to variables associated with industry transformation such as firm size ownership by multinationals and declining industry concentration the model also indicates that strengthening patent policy as well as growth in the size of research intensive industries like the seed industry contributed to the growth of agribusiness r d in india

on the estimation of returns to scale using variable cost functions abstract this paper compares two methods of estimating returns to scale based on variable cost functions it shows specifically how the methods differ and indicates why it is important to select an appropriate method when drawing inferences about policy

estimating a non minimum cost function for hospitals hospital costs have been rigorously scrutinized by economists and health policy experts for several decades despite the large volume of research two related problems persist first although theoretical models of hospital behavior such as 9 and 10 suggest systematic deviations from cost minimization there has been little attention given to modelling and measuring this inefficiency second because cost minimization is a questionable maintained hypothesis most hospital cost research has not used cost functions that are dual to production technology consequently the technological concepts of scale and factor substitution are obscured we address these twin problems by developing and estimating a long run cost function that allows for systematic allocative inefficiency the parameter estimates we present also provide information on the traditional production concepts of scale and factor substitution as well as information on the size and source of allocative inefficiency in u s hospitals hospital services clearly comprise a large industry short term hospital expenditures were 120 billion in 1984 for example the u s short term hospital sector has increased in relative size by a factor of 2 5 since 1960 so that short term hospital expenditures are now about 3 6 percent of the gnp in the united states while industry size alone probably justifies an empirical investigation into the production technology for hospital services we are also motivated by the relevance of our findings to several health policy issues measures of scale economies are crucial in forming public policies concerning entry exit and mergers in the hospital industry yet most studies have not actually estimated the technological concept of scale elasticities of factor substitution are also technological and economic concepts that should be of interest to health policy makers these measures indicate the extent to which cost increases can be avoided by substituting away from the factor whose price has increased hospital cost estimates that do not include factor

exploring hospital production relationships with flexible functional forms this paper estimates a multiproduct variable cost function using data on a sample of california hospitals the results provide useful insights into the advantages and disadvantages of flexible functional forms for cost analysis the translog function appears to provide reasonable estimates of marginal costs when evaluated at or near the approximation point of the function the estimated function performs less satisfactorily however when evaluated outside this range the paper s results do not provide strong evidence of either ray scale economies or of weak cost complementarities there is some evidence however that the degree of scale economies may be underestimated

economies of scale and scope in the provision of diagnostic techniques and therapeutic services in portuguese hospitals this article analyses the provision of auxiliary clinical services that are typically carried out within the hospital we estimate a flexible cost function for three of the most important cost wise diagnostic techniques and therapeutic services in portuguese hospitals clinical pathology medical imaging and physical medicine and rehabilitation our objective in carrying out this estimation is the evaluation of economies of scale and scope in the provision of these services for all services we find evidence of economies of scale and some evidence of economies of scope we also find evidence of diminishing returns to management whereby larger hospitals appear to have surpassed their optimal size these results have important policy implications and can be related to the ongoing discussion of where and how should hospitals provide these services

structural breaks dynamic correlations and hedge and safe havens for stock and foreign exchange markets in greater china this study investigates the dynamic relationship and hedging strategy between stock and foreign exchange markets in greater china for the period 22 july 2005 to 30 november 2015 using the dcc garch model with and without structural breaks the results provide strong evidence of negative time varying correlations between these two markets in greater china consistent with the stock oriented models of exchange rates moreover adding structural breaks reduces the degree of volatility persistence for all considered markets and can provide more accurate hedge and safe haven properties of the us dollar against greater china stock markets the findings have several important implications for portfolio risk managers international investors and policymakers

hospital costs and excess bed capacity a statistical analysis this paper develops and estimates a cost model for u s hospitals analyzing the cost of excess bed capacity a new estimate is worth making for at least two reasons recent changes in the economic environment of hospitals have caused their utilization rates to fall sharply making previous estimates inaccurate second we employ econometric techniques not previously applied to this problem with estimation based on all short term community hospitals from 1979 89 our results based on conservative estimates of the average optimal occupancy rate indicate an annual cost of excess bed capacity of 17 2 billion in 1989 24 1 billion in 1991 and over 25 billion in 1993 copyright 1996 by mit press

economies of scale and scope as an explanation of merger and output diversification activities in the health maintenance organization industry this paper tests for the existence and magnitude of economies of scale and scope as possible explanations for the recent observed trends in increasing health maintenance organization hmo scale through merger and acquisition and scope through greater participation in public enrollee markets using firm level data from a sample of california hmos for the time period 1986 1992 the results suggest that economies of scale provide a strong justification for mergers only in the case of relatively small hmos i e those with fewer than 115 000 enrollees and economies of scope do not explain the increasing hmo enrollment of public enrollees

stock prices and the effective exchange rate of the dollar the literature on the relation between stock prices and exchange rates is very poor and includes few studies that have argued that exchange rate changes do effect stock prices by relying on the portfolio approach to exchange rate determination it is argued that a change in stock prices could also have an impact on exchange rates i e there could be a two way relationship between exchange rates and stock prices granger concept of causality as well as cointegration technique are employed to support this conjecture the empirical results show that there is bidirectional causality between stock prices measured by s p 500 index and the effective exchange rate of the dollar at least in the short run the cointegration analysis reveals that there is no long run relationship between two variables

analysis of hospital production an output index approach in this study a new model of hospital costs is developed and estimated utilizing an output index this theoretically appropriate output index is constructed to accurately reflect the differentiated nature of hospital care by employing both patient and diagnosis characteristics in its construction using this output index we estimate a long run translog cost function with a dataset of 321 california hospitals for the year 2003 we find evidence of economies of scope across specialties within primary care and evidence of scope diseconomies within secondary and tertiary care point estimates of scale economies using the output index indicate that minimum efficient scale is reached at a larger level than when using less refined output measurement techniques that have often been used in similar studies our estimates indicate the importance of accounting for specialty specific scope economies when analyzing the production properties of firms producing differentiated products

measuring and decomposing economies of diversification an application to biogas fuelled cogeneration plants in austria abstract this paper investigates the existence and the degree of economies of diversification for small scaled renewable fuelled cogeneration systems using 2014 cross sectional data from 67 austrian biogas plants it is the first study applying the recently introduced concept of economies of diversification proposed by chavas and kim 2010 which is a generalization and decomposition of economies of scope economies of diversification are decomposed into three additive parts a part measuring complementarity among outputs a part reflecting economies of scale a part reflecting convexity in addition this paper extends the decomposition introduced by chavas and kim 2010 in such a way that the contribution of each input to economies of diversification and its components can be investigated the results indicate substantial cost savings from diversification for very small scaled plants 100 kwel most of the cost savings come from scale economies for larger plants 250 kwel positive complementarity and convexity effects are the main source of economies of diversification and outweigh the negative effect from scale diseconomies in addition to substantial fuel feedstock cost reductions significant costs saving effects from the jointness in labour and other inputs positively contribute to the complementarity effect while on average capital and labour costs positively contribute to economies of scale feedstock costs work in the direction of diseconomies of scale

scale and scope efficiencies through hospital consolidations the hospital sector in the province of ontario has recently completed a large scale restructuring marked by wide ranging hospital closures mergers and program transfers given a generally inconclusive economics literature regulators used an accounting as opposed to an economic approach when predicting gains to consolidations this paper uses an economic cost function to examine economies of scale and scope in the years preceding restructuring where there was little doubt that economies were possible issues relating to output aggregation functional form and scale and scope testing are addressed and an equilibrium cost function is derived from an estimated short run function to measure the cost concepts of interest using index and direct approaches we examine a variety of potential reconfigurations and conclude that there were indeed large scale unexploited gains to strategic consolidation in the hospital sector furthermore these gains may not have been detected using standard approaches in the literature

economies of scope in the health sector the case of portuguese hospitals abstract background economies of scope are defined as the potential cost savings arising from the joint production of two or more outputs rather than their separate production given the importance of the health sector for the community measuring the existence of potential economies of scope contributes to the improvement of this sectors sustainability objective s to identify economies of scope in portuguese hospitals using frontier based methods methods this paper develops 1 a generalized algorithm to obtain locally convex frontiers using the directional order ldo frontier method and 2 a generalized economies of scope based ratio that allows the introduction of any inefficiency source data this paper uses the 2002 2009 dataset for portuguese hospitals concerning the provision of obstetrics gynaecology and paediatrics ogp and psychiatric psy services results considerable economies and diseconomies of scope were found in the portuguese public hospitals a considerable dependence on the production line and on the merger status of the hospital was observed diseconomies of scope were more likely for larger hospitals i e those with more than 6000 inpatient discharges and or 7500 medical appointments per year conclusions even merged hospitals can exploit economies of scope however when they become outsized entities such efforts become more difficult

a composite cost function for multiproduct firms with an application to economies of scope in banking the composite cost function the authors propose combines a quadratic output structure with a log quadratic input price structure and is well suited for examining economies of scope subadditivity and other important properties of multiproduct firms to compare the composite model with an appropriate set of alternative functional forms they develop a parsimonious but general specification that nests the standard translog cost function the generalized translog cost function a separable quadratic cost function and the composite cost function an application to economies of scope in banking confirms the advantages of the composite model copyright 1992 by mit press

economic liberalization and indian economic growth what s the evidence india s growth and poverty performance over the last three decades has been a subject of great curiosity unlike the east asian countries india s growth spurt is not associated with exceptionally high domestic savings or foreign capital inflows or manufacturing exports so what triggered the change in the growth trajectory did the market liberalization policies of the 1990s help how have the initial conditions shaped the process and how has the indian model impinged on india s central problem of mass poverty this paper surveys the literature and offers its own assessment of the drivers of change jel i32 o13 o14 o15 o21 o47

the impact of economic reforms on r d by the indian seed industry abstract declining support for public research and advances in technology and new forms of legal protection have induced more private agricultural research in developing countries this has sparked a debate about appropriate policies regarding private research in this context we examine empirically the consequences of reforms in india s seed policies which loosened various restrictions on the private sector the period since the reforms has shown a remarkable increase in r d effort and an increase in the number of private technology suppliers we argue these changes were largely due to policy reforms

downside and upside risk spillovers between exchange rates and stock prices abstract we examined downside and upside risk spillovers from exchange rates to stock prices and vice versa for a set of emerging economies we characterized the dependence structure between currency and stock returns using copulas and computed downside and upside value at risk and conditional value at risk we documented a positive relationship between stock prices and currency values in emerging economies with respect to the us dollar and the euro with downside and upside spillover risk effects transmitted both ways finally we also documented asymmetries in upside and downside risk spillovers and asymmetric differences in the size of risk spillovers when the domestic currency values against the us dollar and the euro our results consistent with flight to quality phenomena have implications for downside and upside risk management of international investor portfolios in emerging markets

decision rules for allocation of finances to health systems strengthening a key dilemma in global health is how to allocate funds between disease specific vertical projects on the one hand and horizontal programmes which aim to strengthen the entire health system on the other while economic evaluation provides a way of approaching the prioritisation of vertical projects it provides less guidance on how to prioritise between horizontal and vertical spending we approach this problem by formulating a mathematical program which captures the complementary benefits of funding both vertical projects and horizontal programmes we show that our solution to this math program has an appealing intuitive structure we illustrate our model by computationally solving two specialised versions of this problem with illustrations based on the problem of allocating funding for infectious diseases in sub saharan africa we conclude by reflecting on how such a model may be developed in the future and used to guide empirical data collection and theory development

evaluating research and education performance in indian agricultural development india s agricultural research spending has long been regionally uneven regional research intensity ratios which account for size differences indicate research spending has consistently favored southern and western states over northern central and eastern ones farm production patterns have however changed in recent years and regional output growth is being driven by new commodity mixes in this paper we ask which region had the highest factor productivity growth and rate of return to investments in public agricultural research and higher education our analysis relies on a 1980 2008 indian agricultural production and policy dataset together with a dual heteroscedastic production frontier to decompose total factor productivity tfp growth into formal technical progress and efficiency elements the model s regional flexibility affords region to region comparison of multiple research return rates tfp growth and the elements influencing them regardless of return rate measure or allocation scenario evaluated the north has enjoyed the highest return to research spending and the central and east the lowest factor productivity growth has however been strongest in the south primarily on account of efficiency gains overall though the technical progress and productivity growth easily attributable to government supported research has been rather low this article is protected by copyright all rights reserved

the specification of a hospital cost function a comment on the recent literature in the empirical estimation of hospital cost functions two radically different types of specifications have been chosen to date ad hoc forms and flexible functional forms based on neoclassical production theory this paper discusses the respective strengths and weaknesses of both approaches and emphasizes the apparently unreconcilable conflict between the goals of maintaining functional flexibility and keeping the number of variables manageable if at the same time patient heterogeneity is to be adequately reflected in the case mix variables a new specification is proposed which strikes a compromise between these goals and the underlying assumptions are discussed critically

economies of scale in non revenue producing cost centers implications for hospital mergers this paper uses semiparametric methods to estimate the magnitude of economies of scale in 14 non revenue producing cost centers in hospitals there are substantial economies of scale in small hospitals but economies are exhausted in hospitals with over 10 000 discharges annually in recent hospital mergers challenged by federal antitrust agencies one or both hospitals had over 10 000 discharges suggesting that efficiency gains in non revenue producing cost centers will be small and could easily be offset by nominal price increases

opportunity cost estimation of ecosystem services land use changes rank among the most significant drivers of change in ecosystem services worldwide the enhancement of important services such as biodiversity and carbon sequestration requires modifications in land use that can lead to the decline in other ecosystems services targeting the most suitable areas for particular land uses based on comparative advantages requires opportunity cost information across large regions this is a demanding task because the input output relations are ill defined and determined by spatially heterogeneous operational and environmental conditions to address this methodological challenge this paper presents a two stage semiparametric technique that enables multi dimensional production possibility frontiers to be estimated from data provided by biophysical models specific advantages of the proposed frontier approach are its flexibility with regard to assumptions on the convexity of the production possibility set and its freedom from any separability assumptions for the input output space and the space of the heterogeneous background variables the method is illustrated for a case study of 18 central and eastern european countries results show that opportunity costs of changes in ecosystem services provision differ substantially between regions those areas having already relatively high levels of carbon sequestration have a comparative advantage in sequestering carbon opportunity costs of biodiversity are generally positively related with the level of biodiversity up to a turning point after which they are negatively related to illustrate the policy consequences of the observed economies and diseconomies of scope we compare two management regimes to illustrate the potential gains from smart land management