cost efficiency and optimal scale of electricity distribution firms in taiwan an application of metafrontier analysis abstract this paper analyzes the cost efficiency and optimal scale of taiwan s electricity distribution industry due to the substantial difference in network density firms may differ widely in production technology we employ the stochastic metafrontier approach to estimate the cost efficiency of 24 distribution units during the period 1997 2002 empirical results find that the average cost efficiency is overestimated using the traditional stochastic frontier model especially for low density regions the average cost efficiency of the high density group is significantly higher than that of the low density group as it benefits from network economies this study also calculates both short term and long term optimal scales of electricity distribution firms lending policy implications for the deregulation of the electricity distribution industry

cost efficiency and electricity market structure a case study of oecd countries the oecd electricity sector has witnessed significant institutional restructuring over the past three decades as a consequence many power generation utilities now act as unregulated companies that technically compete to sell power on an open market this paper analyses the performance in term of cost efficiency for electricity generation in oecd power sector while accounting for the impact of electricity market structures we employ the short run cost function in which capital stock is treated as a quasi fixed factor input empirical models are developed for the cost function as a translog form and analysed using panel data of 25 countries during the period 1980 to 2009 we show that it is necessary to model latent country specific heterogeneity in addition to time varying inefficiency the estimated economies of scale are adjusted to take account of the importance of the quasi fixed capital input in determining cost behaviour and long run constant returns to scale are verified for the oecd generation sector the research findings suggest there is a significant impact of electricity market regulatory indicators on cost in particular public ownership and vertical integration are found to have significant and sizable increasing impacts on cost thereby indicating policy lessons on the desirable ways to implement structural electricity generation reforms

returns to scale in a highly regulated economy evidence from indian firms abstract this paper examines returns to scale for a panel of indian manufacturing firms from 1976 1985 a period in which government regulations restricted firms expansion observers have argued that these regulations led to unexploited scale economies in indian firms and our estimates lend limited support to this view although a large number of firms produce below the minimum efficient scale average returns to scale for the various industries are not significantly different from one our estimates suggest that recent deregulation will not generate significant gains in scale efficiency unless expansion is heavily biased towards growth in the smaller firms

a model of military spending and economic growth this paper investigates a model of militaryconflict between two regimes in which eachmay initiate combat in order to confiscateresources from the other conflict or thepotential for same results in wastefulmilitary spending which lowers growth foreach regime equilibrium military spendingis determined in a one shot game analysisof the one shot game is followed by a studyof the prospects for an equilibrium inwhich regimes lower military spending anddo not engage in combat in repeated play in this latter case military spending willbe decreased to a level just sufficient todeter deviations from the no combatequilibrium this minimum level increases and growth decreases with the internalpolitical instability of each regime moreover an exogenous increase in thedefensive capability of each regime mayeither increase or decrease growth depending upon the initial level ofmilitary spending and growth

super efficiency evaluations based on potential slack abstract super efficiency evaluations are introduced along the lines of the potential improvements approach in journal of productivity analysis 12 1999 233 both a reference selection and a related super efficiency index are defined the new potential slack super efficiency index is compared to a farrell based super efficiency index as in management science 39 1993 1261 with respect to convex envelopment technologies

examining the cost efficiency of chinese hydroelectric companies using a finite mixture model this paper evaluates the operational activities of chinese hydroelectric power companies over the period 2000 2010 using a finite mixture model that controls for unobserved heterogeneity in so doing a stochastic frontier latent class model which allows for the existence of different technologies is adopted to estimate cost frontiers this procedure not only enables us to identify different groups among the hydro power companies analysed but also permits the analysis of their cost efficiency the main result is that three groups are identified in the sample each equipped with different technologies suggesting that distinct business strategies need to be adapted to the characteristics of china s hydro power companies some managerial implications are developed

scale economies and over capitalization in japanese electric utilities this paper presents empirical evidence on scale economies and overcapitalization in japanese electric utilities we employ the short run equilibrium model in which the variable cost function treats capital stock as a quasi fixed factor we specify the variable cost function as a translog form and estimate it using panel data of nine japanese electric utility firms during the period 1981 to 1985 our results show that eight of the nine firms experience scale economies in the short run but diseconomies in the long run and that seven firms significantly over capitalize as expected by the averch johnson effect

cost structure and productivity growth in european railway systems the purpose of this paper is threefold first to empirically investigate the coststructure of the railway systems in ten european countries belgium denmark france germany greece italy luxembourg the netherlands portugal and the united kingdom of the european union second to provide measures of economies diseconomies of scale and fully investigate the manner by which economies of scale have affected the cost structure of the system and have been affected by the growth in input prices and technology and third to measure economic efficiency and identify its sources in achieving this purpose the translog technology has been used and the translog model was estimated using time series data covering the period 1969 1993 zellner s iterative method was used in estimating the translog model

a note on capacity utilization and measurement of scale economies this article investigates the measurement of returns to scale rts via a cost function in the presence of quasi fixed inputs caves christensen and swanson ccs proposed estimation of a variable cost function and derived a formula for computing rts from it this article extends the ccs results by a investigating the bias that would result from erroneously using a total cost function for measuring rts b indicating that the ccs procedure for measuring scale economies in the presence of quasi fixed inputs is inconsistent for the case of nonhomothetic production technology and c proposing an alternative procedure that allows one to evaluate rts at long run equilibrium points even when firms in the sample are in disequilibrium the similarity between this proposed method and the temporary equilibrium approach for measuring productivity growth is noted as well the empirical results on rts are compared among the three alternative methods total cost ccs variable cost and proposed long run equil

dynamic multi directional inefficiency analysis of european dairy manufacturing firms abstract this paper extends the method of multi directional inefficiency analysis to account for dynamics of firms production decisions the resulting approach dynamic multi directional inefficiency analysis measures variable input and investment specific inefficiency using data envelopment analysis the empirical application focuses on panel data of large dairy manufacturing firms over the period 2005 2012 in three european regions eastern southern and western the results show that investments are the most inefficient factor for firms in all european regions followed by labour and materials however the findings also suggest a high dispersion of investment specific inefficiency scores within the sample the paper also finds that the median dynamic inefficiency is changing rapidly in the years after the beginning of the financial crisis

derivation of long run factor demands from short run responses abstract the concept of the restricted cost function provides a dual approach to the analysis of short run technology it allows also under curvature restrictions inference of the different possible equilibria according to constraints on the firms moreover in this paper the properties of the restricted cost function are spelled out substitution possibilities related to the different regimes are also derived from the restricted cost function this theoretical framework is applied to characterize the french cereal producing sector by using a cross section of farms

economies of scale in the korean district heating system a variable cost function approach this paper aims to investigate the cost efficiency of south korea s district heating dh system by using a variable cost function and cost share equation we employ a seemingly unrelated regression model with quarterly time series data from the korea district heating corporation kdhc a public utility that covers about 59 of the dh system market in south korea over the 1987 2011 period the explanatory variables are price of labor price of material capital cost and production level the results indicate that economies of scale are present and statistically significant thus expansion of its dh business would allow kdhc to obtain substantial economies of scale according to our forecasts vis a vis scale economies the kdhc will enjoy cost efficiency for some time yet to ensure a socially efficient supply of dh it is recommended that the kdhc expand its business proactively with regard to informing policy or regulations our empirical results could play a significant role in decision making processes

an examination of the equilibrium specification and structure of production for canadian telecommunications multiple output models of canadian telecommunications production are estimated under different production equilibria a specification test is conducted between the short and long run equilibrium models and the long run equilibrium is rejected in order to capture the nature of the disequilibrium a dynamic cost of adjustment model is estimated for bell canada there are significant adjustment costs and it is estimated that for 1 00 of marginal capital costs the carrier must incur an additional cost of 0 30 to install the new capital into the production process

efficiency and risk in taiwan banking sbm super dea estimation in this study we adopt the two data envelopment analysis dea methods including banker charnes cooper bcc and slacks based measure sbm super efficiency to investigate whether a bank s technical efficiency index s results incorporating account risk and not incorporating account risk differ significantly the information is obtained from 43 taiwanese banks for the period 1998 to 2002 we also employ the nonradial and slacks based malmquist total factor productivity tfp index to measure the impact of productivity change on the panel data our empirical results from the dea approach are summarized as follows 1 loan quality factors have an impact on a bank s efficiency in general the bank with a higher degree of problem loans drops down its efficiency by incorporating account risk however the bank with a lower degree of problem loans increases its efficiency by incorporating account risk 2 super efficiency provides a good framework for ranking efficient units 3 based on the nonradial an

arming as a strategic investment in a cooperative equilibrium to develop a positive economic theory of military spending this analysis focuses on a game theoretic general equilibrium model of international conflict in which consumption peaceful investment and military spending are endogenously determined the analysis illustrates that when there is repeated interaction between nations a game of threats and punishments generally will not support a disarmament outcome and that fluctuations in military spending can be an endogenous result of fluctuations in aggregate economic activity furthermore the analysis shows how the relation between aggregate economic activity and military spending qualitatively depends on whether governments are acting opportunistically or cooperatively copyright 1990 by american economic association

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

on the measurement of capacity utilization capacity utilization is usually defined as the ratio of actual output to the output corresponding to 1 the minimum point on the short run average total cost curve and 2 the point of tangency between the long run average total cost and short run average total cost curves in practice however capacity utilization is often measured as the ratio of actual to the maximum potential output consistent with a given capital stock this paper demonstrates how to estimate the theoretical measures of capacity utilization and examines the correlation between three measures of capacity utilization and the mcgraw hill estimates of capacity utilization using data from a sample of u s privately owned electric utilities for 1961 83 copyright 1989 by blackwell publishing ltd

trade liberalization and productivity growth new evidence from the turkish rubber industry this paper empirically examines the effects of a change in foreign trade regime on productivity growth based on a generalized leontief factor demand function system total factor productivity growth tfpg rates are calculated for the turkish rubber industry during a substantial trade liberalization in the 1980s tfpg was significantly higher following trade liberalization technological change was the major contributor to this growth when a panel data estimation technique is used to explain technological change the effects of trade liberalization become clearer a one percentage point increase in the protection level led to more than a one percentage point 1 27 decline in the technological change rate

stochastic estimation of firm inefficiency using distance functions econometric estimation of allocative and technical efficiency has frequently been carried out using a shadow cost function and its associated share or demand equations since the problem is formulated in terms of shadow prices the effect of allocative inefficiency on input usage must be computed indirectly from input share or demand equations as an alternative approach we derive and estimate an input shadow distance system comprising the dual shadow input distance function and the price equations derived from the shadow cost minimization problem estimated shadow quantities provide direct estimates of the effect of allocative inefficiency on input usage one can also easily calculate firm and time varying technical inefficiency by decomposing the residuals we also compute returns to scale and the cost savings obtained by eliminating both types of inefficiency our approach is illustrated using a panel of u s railroads both the cost function and the distance function are valid representations of multioutput technologies the arguments of the cost function are output quantities and input prices while the arguments of the distance function are input and output quantities the input distance function measures the extent to which the firm is input efficient in producing a given set of outputs while the cost function assumes cost minimization by a firm which is input efficient the shadow cost function is a generalization of the cost function and depends on output quantities and shadow internal to the firm input prices rather than actual market input prices thus the shadow cost function assumes shadow cost minimization but not actual cost minimization this function has frequently been employed in fixed effects estimation of allocative efficiency ae and technical efficiency te an observed input vector is technically efficient if it is on the isoquant of the observed output vector an input vector is allocatively efficient if the radial contraction of the input vector to the isoquant is cost minimizing identification of parameters that measure ae can be achieved by the estimation of a shadow cost system comprising the actual cost equation and the share or input demand equations which are expressed in terms of shadow prices and output quantities shadow cost systems have been estimated by atkinson and halvorsen 1984 sickles good and johnson 1986 eakin and kniesner 1988 kumbhakar 1992 and atkinson and cornwell 1994 among others given panel data the deviation of shadow from actual input prices can be measured by price specific inefficiency parameters that may vary across firms and over time however the estimation of the effect of

crime confiscation and frowth for and against leviathan this paper presents a dynamic general equilibrium model ofrent seeking in which the payoffs and the choices between productiveand non productive activity are endogenous the economy has the potential for endogenous growth but when agents can choose between confiscation and productive investment growth is no longer possible

economies of scale and utilization in the swiss electric power distribution industry economies of scale and utilization in the swiss electricity distribution industry are analysed a translog variable cost function was estimated using panel data for a sample of 39 municipal utilities over the period 1988 1991 economies of both scale and utilization appear to exist in the distribution of electricity both for small medium and large sized utilities thus the empirical evidence suggests sub additivity of the cost function over the relevant range of output for the swiss electricity distribution utilities a necessary condition for a natural monopoly to exist

productivity scale economies and technical change reconsidered recently several writers have presented theoretical arguments and empirical evidence that suggests that an electric utility s long run productivity growth rate can be decomposed into a variety of factors for example gollop and roberts 12 decompose a utility s total factor productivity growth rate into three distinct components 1 technical change 2 a scale effect and 3 an environmental regulatory factor results for the 1970s indicate that declining rates of technical change and output growth coupled with increased regulatory intensity lead to a noticeable decline in the firm s long run productivity growth rate similarly nelson and wohar 15 examine the impact of technical change scale economies and rate of return regulation on an electric utility s longrun productivity growth rate evidence suggests that the technical change and scale components behaved in a manner similar to the gollop and roberts 12 findings the evidence concerning the impact of the regulatory factor was less convincing due to the difficulty in obtaining reliable estimates of the regulatory constraint parameter a common characteristic of this literature is that the firms under investigation are assumed to employ all inputs at their long run cost minimizing levels as such the productivity decomposition model is primarily concerned with distinguishing between shifts in the production function versus movements along the production structure according to caves christensen and swanson 5 a violation of the long run equilibrium assumption adds an equally important factor to the decomposition of productivity growth specifically the movement toward or away from longrun equilibrium as a consequence researchers must further distinguish between long run and short run productivity growth estimates 2 in a recent article 9 daly and rao illustrate theoretically and empirically using a long run cost function and data pertaining to ontario hydro that a firm s long run productivity growth rate can be decomposed into 1 technical change 2 non constant returns to scale and 3 a capacity

returns to scale from variable and total cost functions abstract estimates of the returns to scale from a variable cost function evaluated at the actual and optimal capital stocks and a total cost function are presented the estimates generally differ depending in part upon the output at which they are evaluated

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

factor substitution and economies of scale and utilisation in kuwait s crude oil industry abstract the cost structure of the crude oil industry in kuwait has been examined with specific focus on factor substitution and economies of scale and utilisation this has been done by estimating translog cost functions both long run and short run using time series data covering the period from 1976 to 1996 the results indicate that the implied production structure is non homothetic and the pattern of scale effect is labour saving but capital and material using the evidence also supports the presence of an induced exogenous technical change which is non neutral labour and capital using and material saving the elasticity of substitution between capital and labour is positive implying that the two inputs are substitute the results also indicate the existence of diseconomies of scale in the production of crude oil but no economies or diseconomies of utilisation

estimating a multiple output generalized box cox cost function cost structure and productivity growth in belgian railroad operations 1950 1986 abstract in this paper we estimate a multiple output generalization of berndt and khaled s box cox cost model to study the cost structure and growth in productivity in belgian railroad operations the estimated model includes several commonly used flexible functional forms as special or limiting cases empirical results indicate approximately constant returns to scale and an average rate of productivity growth of slightly less than 2 over the sample period these findings were robust across cost function specifications casting some doubt on the importance of choosing among flexible functional forms

productivity change technical progress and relative efficiency change in the public accounting industry we present evidence on components of productivity change in the public accounting industry toward the end of the 20th century using revenue and human resource data from 64 of the 100 largest public accounting firms in the united states for the 1995 1999 period we analyze productivity change technical progress and relative efficiency change over time the average public accounting firm experienced a productivity growth of 9 5 between 1995 and 1999 we find support for the hypothesis that technical progress rather than an improvement in relative efficiency was the reason for this productivity growth firms that were early movers into management advisory services mas and those that emphasized growth in mas over growth in the traditional audit and tax services enjoyed significantly higher productivity growth than their peers these firms also contributed significantly more to the industry s technical progress

estimation of input distance functions a system approach this article offers a methodology to address the endogeneity of inputs in the input distance function idf formulation of the production processes we propose to tackle endogenous input ratios appearing in the normalized idf by considering a flexible simultaneous system of the idf and the first order conditions from the firm s cost minimization problem our model can accommodate both technical and input allocative inefficiencies amongst firms we also present the algorithm for quantifying the cost of allocative inefficiency we showcase our cost system based model by applying it to study the production of norwegian dairy farms during the 1991 2008 period among other things we find both an economically and statistically significant improvement in the levels of technical efficiency among dairy farms associated with the 1997 quota scheme change which a more conventional single equation stochastic frontier model appears to be unable to detect

guns butter and anarchy a state in the international system implicit in realism must allocate its limited resources between satisfying its intrinsically valued ends and the means of military power i formalize this guns versus butter problem in a simple infinite horizon model in which two states must continually decide how to allocate their resources and whether to attack the other state the analysis establishes sufficient conditions to ensure the existence of an equilibrium in which neither state attacks shows that there is a strictly pareto dominant pair of peaceful equilibrium payoffs characterizes the unique peaceful markov perfect equilibrium that yields them and describes the comparative statics of the equilibrium allocations more broadly the analysis also suggests that the notion of anarchy has little if any substantive significance distinctively related to international politics and that the problem of absolute and relative gains is superfluous

political regimes and economic growth arguments that relate regimes to growth focus on property rights pressures for immediate consumption and the autonomy of dictators while everyone seems to agree that secure property rights foster growth it is controversial whether democracies or dictatorships better secure these rights the main mechanism by which democracy is thought to hinder growth is pressure for immediate consumption which reduces investment only states that are institutionally insulated from such pressures can resist them and democratic states are not the main argument against dictatorships is that authoritarian rulers have no interest in maximizing total output these views are summarized in turn

regulation capital vintage and technical change in the electric utility industry this paper presents estimates of the rate of technical change in the electric power industry over the period 1951 78 the estimated model directly incorporates the effects of rate of return regulation and uses both a time trend and a vintage index to represent disembodied and embodied technical change respectively the results indicate that disembodied technical change was the primary source of cost reduction during 1951 70 and that tighter regulation as represented by a one point reduction in the rate of return would have reduced the rate of technical change by an average of 1 2 during 1951 78 34 references 18 footnotes 3 tables

technology debt and the exploitation of growth options abstract this paper analyzes the effect of the firm s technology on the agency costs of debt it is shown that for an important class of technologies agency costs are not a uniformly rising function of leverage for these technologies relatively high leverage can be consistent with a small tax subsidy the effect of technology on the exploitation of real options by a levered firm is examined the analysis provides a framework for a direct test of the agency cost of debt hypothesis using cost data

returns to scale concept estimation and analysis of japan s turbulent 1964 88 economy there is policy interest in factoring productivity growth into technical progress and returns to scale components our approach uses exact index number methods to reduce the parameters that must be estimated and allows us to exploit the cross sectional dimension of plant level panel data we show that the same equation can also be used to estimate harberger scale economies and technical progress indicators that require fewer assumptions estimates of the elasticity of scale for japanese establishments in three major industries over 1964 88 are presented our study spans the high growth era of the 1960s two oil shocks and other exogenous shocks il y a interet en politique publique a identifier les composantes de la croissance de la productivite attribuables au progres technique et aux rendements a l echelle l approche utilise les methodes des nombres indices exacts pour reduire les parametres qui doivent etres estimes et pouvoir exploiter la dimension transversale des donnees de panel au niveau de l etablissement on montre que la meme equation peut etre utilisee pour estimer les indicateurs d economies d echelle et de progres technique a la harberger lesquels necessitent un plus petit nombre de postulats on presente des evaluations de l elasticite d echelle pour des etablissements japonais dans trois industries importantes entre 1964 et 1988 l etude couvre la periode de forte croissance des annees 1960 celle des deux chocs petroliers et d autres chocs exogenes

domestic politics and international conflict this paper explores the interactions between domestic politics and international conflict the analysis shows that electoral uncertainty associated with competition between political parties each representing a specific group of the electorate imparts a negative bias on the nation s military spending given military spending by other nations in turn electoral uncertainty lowers other nations incentive to arm as well in this context democratic institutions can be thought of as a possible precommitment mechanism that reduces the severity of conflict between nations and thereby increases the amount of resources available globally for consumption copyright 1994 by american economic association

the effects of competition on publicly owned firms evidence from the municipal electric industry in the u s abstract previous studies have examined the effects of competition on privately owned firms this study examines the impact of competition on a sample of publicly owned electric utilities operating in the u s during 1961 1980 estimates from a translog variable cost function indicate that competitive firms had higher generating costs than monopolists ceteris paribus in addition it appears that operating costs would fall significantly if a single monopolist were to replace two competitors in a given market

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

scale economies and inefficiency of u s dairy farms this study employs data drawn from the 2000 agricultural resource management survey a u s department of agriculture sponsored farmers survey the article estimates returns to scale relationships across dairy farms of different sizes and across different regions incorporating variables hypothesized to influence farm performance results point to significant scale economies in u s dairy farms and underscore the importance of taking account of inefficiency when estimating scale economies contrary to previous research the preferred cost function specification does not show a region of decreasing returns to scale this finding helps explain why the average size of dairy farms has been increasing

input substitution economies of scale and productivity growth in the us upholstered furniture industry cost factor demand and productivity growth are considered in the upholstered furniture industry over 1958 87 factors are divided into labour capital and materials it is found that all inputs are substitutes in production although substitution elasticities are small factor demand is price inelastic for all inputs the industry operates around minimum average cost productivity growth is small but significant the results indicate that labour will continue to be important in the industry however regional comparative advantage is not related to labour alone the results suggest that policies to attract or retain the industry must consider the low degree of factor substitution

reducing urban public transport costs by tendering lots a panel data estimation allotment is for urban authorities a governance strategy to reduce public transport costs it consists of dividing a network into several lots so as to multiply the number of calls for tender on the one hand gains should be obtained by increasing competition for the market and reducing the costs of obtaining accurate information on the other hand cutting a network into several parts is also expected to have negative consequences on production costs in terms of lower returns to scale many industry stakeholders believe that the latter element more than compensates for the former in this article we estimate a translog cost function with a panel of 141 french urban public transport networks our main conclusion is that scale economies are exhausted for a production of about 3 million vehicle kilometres per year therefore as far as returns to scale are concerned allotment would reduce the costs of public transport services for the main cities of our sample a second dividend for allotment is then presented and implies that the assumed trade off between returns to scale and increased competition is irrelevant

standard costs of regional public rail passenger transport evidence from italy the paper estimates the standard cost in italian regional public rail passenger transport services lptr depending on service characteristics the results highlight the crucial role of number of

incentive efficient production frontiers an agency perspective on dea in this paper we examine how empirical production frontiers may contribute to the incentives of production units we consider a series of data envelopment analysis dea frontiers and we show when these may be incentive efficient in the sense that they contain all the information that are relevant for optimal incentive provision the frontiers considered include the so called constant decreasing and varying return to scale models the free disposability and the free replicability models as well as the increasing and decreasing return to scale models based on a relaxed set of assumptions also we illustrate how to design optimal incentive schemes based on such frontiers contents 1 introduction 2 the incentive problem 3 production frontiers and productivity measures 4 incentive efficient production frontiers 5 extensions 6 an example 7 final remarks mathematical appendix references

price margins and capital adjustment canadian mill products and pulp and paper industries abstract the purpose of this paper is to estimate a model incorporating non competitive behaviour in product and factor markets in addition capital accumulation is subject to adjustment costs so that firms are not constrained to be in long run equilibrium the model is applied to two major canadian manufacturing industries pulp and paper and mill products the results show for both industries in each of three product markets and the wood input market that there is competitive behaviour in addition the industries are not in long run equilibrium as marginal adjustment costs cause marginal profit to exceed the rental rate on capital with the industries exhibiting short run competitive behaviour in product and factor markets new estimates are derived for scale economies and rates of technological change unlike the results from other studies both industries exhibit small scale economies and positive rates of technological change

can the shadow of the future harm cooperation abstract it is generally thought that in long term relationships high valuations of the future are conducive to cooperation in an intertemporal model of conflict however we demonstrate the possibility of the opposite effect a longer shadow of the future may harm cooperation in particular we show that the degree of inefficiency is positively related to i the agents valuation of the future ii potential growth rates in resources iii the size of initial resource endowments and iv the effectiveness of conflict

a general index of technical change this paper outlines a procedure for estimating a general index of technical change within the context of a quite general production technology specifically when panel data are available for firms in an industry time specific dummies can be combined in a nonlinear estimation procedure to yield a general index of technical change that may be both nonneutral and scale augmenting this approach offers numerous advantages over the traditional time trend representation of technical change for example the general index can serve as the basis for analysis of the determinants of technical change results for a sample of 30 electric utilities over the period 1951 78 show that the productivity decline of the 1970s can be attributed primarily to sulphur oxide restrictions and secularly declining capacity utilization due to rapidly increasing peak load demands

the sensitivity of productivity growth measures to alternative structural and behavioral assumptions an application to electric utilities 1951 1984 this article examines the sensitivity of three alternative multifactor productivity growth estimates for the electric utility industry during the 1951 1984 period the results indicate that multifactor productivity growth estimates are quite sensitive to the relaxation of various structural and behavioral assumptions first a benchmark measure is constructed along the lines suggested by solow 1957 this residual approach produces estimates that suggest a substantial decline in firm level productivity growth after the mid 1960s prior to obtaining the second and third estimates empirical tests of the structural and behavioral assumptions underlying a firm s operation are conducted first the structural assumption of constant returns to scale is rejected and the resulting long run scale adjusted multifactor productivity growth estimates are found to be consistently less than the residual estimates second the behavioral assumption of long run equilibrium is rejected comparing the long run scale ad

economies of scale and utilization in electricity generation in kuwait cost structure of electricity generation in kuwait has been examined with specific focus on the economies of scale and utilization this has been done by estimating a translog variable cost function using time series data covering the period from 1965 to 1990 the results indicate the existence of diseconomies of scale in the generation of electricity but no economies or diseconomies of utilization

a goal programming constrained regression review of the bell system breakup the recently implemented court decision to break up bell american telephone telegraph co to accord with u s anti trust laws represents a highly significant policy decision which is proving to be influential in other countries as well as the u s the telecommunication industry is of such size and importance that even relatively small economies that might be lost with bell s breakup as a natural monopoly could involve substantial welfare losses to consumers and producers studies commissioned by the u s justice department that approached this topic by econometric methods reported that the evidence failed to support the contention that bell was a natural monopoly here a goal programming constrained regression as developed in the management science literature uses the same functional form and the same data but nevertheless reverses the main findings of the econometric studies in every one of the 20 years covered this kind of difference in results obtained by two different methods of analysis poi

price cost margins exports and productivity growth with an application to canadian industries a model is estimated for oligopolistic industries producing multiple outputs in short run equilibrium outputs are sold domestically and exported while capital is treated as a quasi fixed factor the model is applied to the canadian non electrical machinery electrical products and chemical products industries the results show that there is significant oligopoly power in each of the industries and that the degree of this power differs between the domestic and export markets total factor productivity is decomposed price cost margins exert little influence but the rate of technological change returns to scale and the rate of capital adjustment determine productivity growth

a nonparametric analysis of variable cost minimization in the united states paper industry nanparametric tests of consistency of data with variable cost minimization returns to scale homotheticity are described and applied to data from the us paper industry results indicate that data from the us paper industry are consistent with the minimization of variable costs increased productivity due to technological improvements or increasing returns to scale and a homothetic production function a method derived from nonparametric estimation for screening hypothesized data sets prior to predictive use with an estimated production function is described

technical efficiency of european railways a distance function approach this study has two principal objectives the first objective is to measure and compare the performance of european railways the second objective is to illustrate the usefulness of econometric distance functions in the analysis of production in multioutput industries where behavioural assumptions such as cost minimization or profit maximization are unlikely to be applicable using annual data on 17 railways companies during 1988 1993 multioutput distance functions are estimated using corrected ordinary least squares cols the resulting technical efficiency estimates range from 0 980 for the netherlands to 0 784 for italy with a mean of 0 863 the distance function results are also compared with those obtained from single output production functions where aggregate output measures are formed using either total revenue or a tornqvist index the results obtained indicate substantial differences in parameter estimates and technical efficiency rankings casting significant doubt upon the reliability of

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

the production characteristics of local public education a multiple product and input analysis since the seminal work of baumol panzer and willig 1 economists have become increasingly interested in incorporating the multifaceted nature of real world production functions into their empirical analyses multiproducts multiple inputs and the relaxation of the long run equilibrium condition are some prime examples of major innovations in production modeling an excellent example of this innovative literature is the study by cowing and holtmann 7 that focuses on the short run production characteristics associated with the hospital services industry specifically cowing and holtmann find evidence contrary to long run equilibrium and that economies of scope are at least as important as economies of scale in the production of hospital services moreover several empirical studies relating to the production characteristics of other goods and services such as higher education 6 crime prevention 9 electric utilities 15 and airlines 5 have provided ample evidence that these pertinent factors matter from both an econometric and a policy perspective the literature concerning the production characteristics of primary and secondary education however has lagged behind in terms of incorporating more realism into the analysis typically studies concerned with primary and secondary education production 2 3 13 14 maintain that schools operate at a long run equilibrium position and produce a single output with a single input i e teachers thus assuming away factors which these other industry studies have found to be significant in fact jimenez 12 is the only study to date on local primary and secondary education production that is based on less restrictive assumptions several limitations are associated with his research however each of these limitations reduce the generality of his findings concerning the production characteristics of primary and secondary education first jimenez employs a small sample to obtain estimates of various production characteristics bringing into question the overall

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

cost structure and capacity in the norwegian pelagic fisheries the parameters of the short run cost function are estimated for three vessel types taking part in the norwegian pelagic fisheries purse seine vessels trawlers and coastal vessels the generalized translog functional form is used estimates of returns to scale are calculated and the results indicate that there are substantial economies of scale in all vessel classes it is further investigated whether excess capacity varies with vessel size and age the analysis suggests increased quotas per vessel to avoid rent dissipation with the total allowable catch given the number of participating vessels must be reduced

privatisation and the efficiency of decentralised electricity generation some evidence from inter war britain the privatization of the electricity supply industry in england and wales has established a decentralized system of supply this paper considers the efficiency of the decentralized interwar electricity supply industry a generalized stochastic frontier cost function is specificed enabling the estimation of returns to scale and inefficiency at plant level these estimates are used in turn to examine the efficiency of stations selected by the central electricity board to supply the national grid the results imply that a decentralized system was not only feasible but that the selection procedure was sensitive to efficiency differences at plant level copyright 1992 by royal economic society

substitution possibilities for unpriced natural resources restricted cost functions for the canadian metal mining industry a bstract the effects of resource depletion on economic growth depend critically on the elasticities of substitution between non renewable natural resources and reproducible inputs estimation of the elasticities of substitution for natural resources has been hindered by the absence of data on their prices which results from the prevalence of vertical integration in natural resource industries in this paper we use the theory of restricted cost functions to develop a general procedure for estimating substitution possibilities for unpriced inputs estimation of the model with data for the canadian metal mining industry indicates that the elasticities of substitution for the natural resource metallic ore are equal to unity

cost structure and technological change of local public transport the kaohsiung city bus case this study has developed a translog cost function for the kaohsiung city bus kcb to analyse its cost structure and economic characteristics based on monthly data over the time period from january 1996 to december 2000 the empirical results reveal that economies of density in the provision of bus services in kaohsiung do prevail the estimated marginal cost which is less than the average cost but greater than the current bus fare indicates that the subsidy is necessary due to the existence of returns to density rtd the kcb could obtain cost saving benefits by extending its output scale the kcb production technology is also not neutral the effects of technological change on the kcb costs suggest that over the period 1996 2000 technological progress did lead to cost saving the pure productivity growth rate increased from 0 45 in 1998 to 3 in 2000

spillovers from publicly financed r d capital in high tech industries abstract this paper employs a dynamic production model to examine the short run effects of publicly financed r d capital on the cost structure of six high tech us manufacturing industries the results show that given an industry s output publicly financed r d capital reduces the variable production cost in all industries in addition an increase in publicly financed r d causes output to increase implying that producers as well consumers are better off despite the presence of strong monopoly power in some industries a low bound for the social rate of return to publicly financed r d is also calculated

productivity growth and incentive regulation in austria s gas distribution abstract the projected rate of productivity growth is the critical determinant of the price cap in incentive regulation however the regulatory authorities generally lack sophisticated industry tfp studies to set an optimal cap we thus estimate productivity growth in the austrian gas distribution sector in a translog cost function framework a key feature is our unique panel database on costs and outputs of regulated utilities for the period 2002 2013 covering six years prior and during incentive regulation as introduced in 2008 we find a modest tfp growth rate in the early sample years followed by a decline to zero or even slightly negative rates in recent years we also find a significant potential for returns to scale which is left unexploited indicating that utilities could significantly save on costs by merging as essential investments have already been undertaken in the past opportunities for technological progress seem to be limited in recent years

estimating and decomposing the rate of technical change in the swedish pulp and paper industry a general index approach abstract the purpose of this paper is to analyse the rate and the impacts of technical change in the swedish pulp and paper industry in contrast to earlier research on this industry we replace the standard time trend with time specific dummy variables enabling the estimation and decomposing of a general index of technical change the analysis is made within a translog cost function model which is estimated using a panel data set with observations across individual paper and board mills over the time period 1974 1994 our results indicate that the highest rates of technical change have generally occurred during the latter part of this period pure technical change is the primary component that has directed technical change over the entire time period we also find evidence of non neutral technical change energy use has been stimulated by technical improvements while labour use has been discouraged also technical change has had wastepaper and woodpulp using impacts however the magnitudes of these latter impacts are relatively small implying that the increase in wastepaper use during the last decades has mainly been stimulated by relative price changes

measuring embodied technical change in the us local telephone industry this study attempts to measure the rate of embodied technical change by using a short run variable cost function that contains arguments for labour and capital quality in this short run variable cost model the expansion of the amount of physical capital increases variable costs due to more maintenance outlays and then it leads to improvements in capital quality when a measure of competition is included as a proxy for organizational efficiency improvements in labour and capital quality explain more than two thirds of productivity growth the degree of returns to scale and the shadow cost of capital input in the embodiment cost model are presented as well the study is based on pooled time series and cross section data of eight us local exchange carriers

political variables in cross country growth analysis the recent boom in cross country growth analysis has renewed the empirical interest in political sources of economic growth a large number of studies have tested political variables in growth regressions and a very heterogenous set of variables has been proposed to measure economically relevant differences in the political systems of countries this paper distinguishes five categories of relevant political variables democracy government stability political violence policy volatility and subjective perception of politics for each of these categories the specification testing method and results of the most relevant studies are presented and are critically discussed the paper concludes that measures of democracy are least successful and measures of policy volatility and subjective perception of politics most successful as explanatory variables in cross country growth regressions

the impact of environmental regulations on industry productivity direct and indirect effects abstract the paper develops an approach to measuring the impact of environmental regulations on total factor productivity growth which is less restrictive than a simple growth accounting approach environmental regulations have a direct impact on productivity growth due to the diversion of resources toward required abatement capital there can be a further indirect effect however as conventional inputs and production processes are changed in response to requirements to purchase abatement capital we estimate this indirect effect using a flexible functional form cost function total factor productivity and the direct and indirect productivity effects of environmental regulations are presented for five polluting industries we find that the indirect effect can be either positive or negative and in all industries is energy using the net impact of environmental regulations on total factor productivity growth is fairly small given that these are the most polluting industries they account for about 10 30 of the productivity decline of the 1970s in these industries

capacity utilization and its determinants for a container shipping line theory and evidence under utilization of fleet capacity appears to be a long lasting issue in the container shipping industry also there are some difficulties unsolved while measuring the ratio of capacity utilization cu of a container shipping line from the perspective of an engineering approach the slots capacity installed is the most popular way to represent the capacity output since the slots capacity installed lacks theoretical support this study adopts an economics model to find the capacity output of a shipping line further the derived cu ratio identifies the realized utilization of fleet capacity for a shipping line focused on the three largest container shipping lines in taiwan this article shows that their fleet capacity are totally under utilized and the movement patterns of cu ratios are approximately identical in addition the variations of cu ratios also suggest that the enactment of ocean shipping reform act has contributed a positive effect on the capacity utilization of a container shipping line