telecommunications in greece a study of production structure and natural monopoly issue until recently telecoms were everywhere large monopolies basically because their production was believed to have many natural monopoly attributes now new forces originated in technological evolution have set in to transform the monopoly regime but did natural monopoly attributes really exist the empirical evidence under consideration concerns hellenic telecom a complete study of the industry s production structure and a natural monopoly test are offered test s results are important for policy formation regarding market s degree of liberalization in greece given also the resemblance of current technology in different countries it is possible to claim a more general validity of the obtained results on production technology beyond the specific case studied

efficiency growth and concentration an empirical analysis of hospital markets taking an evolutionary view of markets harold demsetz hypothesized that firms differ persistently in efficiency and that industry concentration results from growth of efficient firms at the expense of inefficient ones we test the hypothesis with high quality microdata from the us hospital industry an industry of keen policy and scientific interest we measure efficiency by firm in the early 1980s and relate it to subsequent growth of efficient firms to the persistence of profit differences and to changes in the concentration of markets initial hospital efficiency and subsequent growth and profitability are significantly and positively related also greater initial variation in hospital efficiency within local markets is positively related to subsequent growth in market concentration these findings support the logic of demsetz s evolutionary efficiency hypothesis though they cannot confirm the stronger idea that variation in firm efficiency is the dominant explanation for changes in concentration

the proximity of nations to a socially sustainable steady state economy abstract there has been increasing interest in new economic models that aim to improve quality of life without increasing consumption this article provides the first empirical analysis of how close modern day economies are to the concept of a steady state economy and explores whether there is any relationship between a country s proximity to such an economy and its social performance the analysis is carried out using the degrowth accounts a set of 16 biophysical and social indicators that are derived from herman daly s definition of a steady state economy and the social goals of the degrowth movement these indicators are applied to 180 countries over a 10 year period the analysis reveals that the majority of countries in the world are biophysical growth economies there are only a small number of countries where resource use is relatively constant from year to year e g denmark france japan poland romania and the us and only four countries experiencing biophysical degrowth germany guyana moldova and zimbabwe there are no countries that achieve a true steady state economy defined as an economy with a stable level of resource use maintained within ecological limits however a few countries come relatively close including colombia cuba kyrgyzstan romania and south africa in general countries with stable resource use perform better on many social indicators than countries with either increasing or decreasing resource use this finding runs contrary to conventional economic thought however social performance is also higher in countries with greater per capita resource use overall these findings suggest that a steady state economy can be socially sustainable but countries need to become much more efficient at transforming natural resources into human well being if all seven billion people on earth are to lead a good life within ecological limits

regulation and efficiency in transition the case of telecommunications in italy abstract in regulating the telecommunications industry the separation between network and retail functions which is designed to countervail the market power of incumbent operators is a relevant issue despite its importance little empirical research has addressed the effects of such a separation accordingly this paper provides insights into the consequences of the italian communications regulatory authority s agcom decision to impose this type of separation on the incumbent telecommunications operator telecom italia in particular the studied separation is between the firm s network related functions and those used for provision of its communication services the present research finds that the type of separation implemented by agcom allows a provider to maintain the advantages of operational scale in its network structure without dampening competition in the existing market for communications services the study also offers further empirical evidence on the advantages of a composite vs translog function in analyzing the multiproduct cost structure of a telecommunications operator

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

optimal control of locusts in subsistence farming areas abstract locust swarms hit subsistence staple crop growing households at random and are not privately controllable an aerial spraying optimal control model that supports the said households livelihood at least expected cost is therefore developed the qualitative properties of the model are analysed under economically plausible but mild assumptions the steady state comparative statics reveal that the locust swarm size and the probability of a household s crop being destroyed by a swarm decrease with the number of households yield per household and the staple crop s replacement price and increase with the marginal cost of spraying and the planner s discount rate a local comparative dynamics analysis is also conducted as it provides the necessary economic intuition behind other ostensibly anomalous steady state comparative statics results

a test for subadditivity of the cost function with an application to the bell system stable url http links jstor org sici sici 0002 8282 28198409 2974 3a4 3c615 3aatfsot 3e2 0 co 3b2 rthe american economic review is currently published by american economic association your use of the jstor archive indicates your acceptance of jstor s terms and conditions of use available athttp www jstor org about terms html jstor s terms and conditions of use provides in part that unless you have obtainedprior permission you may not download an entire issue of a journal or multiple copies of articles and you may use content inthe jstor archive only for your personal non commercial use please contact the publisher regarding any further use of this work publisher contact information may be obtained athttp www jstor org journals aea html each copy of any part of a jstor transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission the jstor archive is a trusted digital repository providing for long term preservation and access to leading academicjournals and scholarly literature from around the world the archive is supported by libraries scholarly societies publishers and foundations it is an initiative of jstor a not for profit organization with a mission to help the scholarly community takeadvantage of advances in technology for more information regarding jstor please contact support jstor org http www jstor orgmon jul 2 16 52 19 2007

economies of scope and the cash crop food crop debate in senegal abstract the government of senegal plans to achieve national food self sufficiency by inducing farmers to switch away from cash crops toward food crop production this paper examines selected economic consequences of the planned substitution using empirical data recently collected in southeastern senegal cost function estimates suggest that farmers are currently producing too much food crop and too little cash crop output given existing technology and observed relative prices moreover economies of scope in producing both food crops and cash crops on the same farm result in a 22 cost saving relative to growing both types of crops on separate specialized farms

identifying barriers toward a post growth economy a political economy view abstract in this paper we take a political economy perspective on barriers that inhibit a transition beyond the growth paradigm that is we frame transition barriers as looming conflicts of interest specifically we investigate potential transition barriers within three case studies first unemployment represents the most commonly cited reason why economic growth is considered indispensable second alternative indicators to gross domestic product gdp have not succeeded in replacing gdp as a standard metric of economic welfare third pension schemes rely on economic growth to offset demographic change in each of these three examples we identify actor interest constellations that foster the status quo of a growth economy we conclude that compensating some of those actors who would presumably be worse off in a post growth economy may be necessary though not sufficient for a transition

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

deregulation redux does mandating access to bottleneck facilities necessarily improve welfare we demonstrate that deregulation in the form of vertical separation of network components into natural monopoly and potentially competitive markets does not truly represent a lessening of regulatory burdens that is vertical separation is not synonymous with deregulation more competitors is not equivalent to more competition we assume a public interest regulator that is constrained to set a unit price that maximizes expected welfare subject to a break even constraint we show that under both symmetric and asymmetric information cases the information demands on the regulator of the vertically integrated system are no greater than those in the case of vertical separation

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

diversification diseconomies of scope and vertical contracting evidence from the taxicab industry this paper studies how firms reorganize following diversification proposing that firms use outsourcing or vertical disintegration to manage diseconomies of scope we also consider the origins of scope diseconomies showing how different underlying mechanisms generate contrasting predictions about the link between within firm task heterogeneity and the incentive to outsource following diversification we test these propositions using microdata on taxicab and limousine fleets from the economic census the results show that taxicab firms outsource by shifting the composition of their fleets toward owner operator drivers when they diversify into the limousine business the magnitude of the shift toward driver ownership is larger in less urban markets where the tasks performed by taxicab and limousine drivers are more similar these findings suggest that 1 firms use outsourcing to manage diseconomies of scope at a particular point in the value chain and 2 interagent conflicts can be an important source of scope diseconomies

access costs and entry in the local telecommunications network a case for de averaged rates abstract the telecommunications bill passed by congress in february 1996 means that the present method of covering the cost of customer access to the local telecommunications network through non cost based access charges cannot be sustained over the long run however there is a belief that cost based rates at the local level would be prohibitively high and would threaten universal service objectives major tasks facing the federal communications commission and state regulators will be determining what the terms and charges for interconnection should be and who will bear the costs associated with universal service this work estimates a generalized translog cost function of access costs at the local level in order to address these issues the results of this study are that there are economies of scale in the provision of access to the local network and that these costs differ by geographical location one of the important findings of this study is that contrary to popular belief cost based rates at the local level would not be prohibitively high and would not threaten universal service objectives however given the existence of economies of scale pro competitive regulatory controls will be required that will restrain dominant carriers from abusing their market power and network owners from squeezing out new entrants

the sustainable welfare index towards a threshold effect for italy abstract gdp as a key parameter for macro economic policy has long been criticized one of the better known monetary alternatives to gdp is the isew a synthetic proxy of sustainable welfare theoretical and methodological limitations of this indicator have been identified and several refinements or extensions proposed gpi for example building on these approaches this article presents a new composite flow oriented indicator directly comparable with gdp the proposed sustainable welfare index swi is calculated for the italian case over the 1960 2014 period the estimate of swi over an extended period of fifty four years provides evidence for a previously undetected threshold effect in italy by means of a flow oriented indicator unlike gdp swi per capita stops increasing in 1991 empirical results show that the level of sustainable welfare in italy stops growing mainly because of a rise in income inequality a decline in non paid domestic work and a worsening of the net fixed capital formation and net international investment position

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

modelling cost structure the bell system revisited this paper analyses a recent public policy decision and the crucial role played by the choice of the functional form the break up of the bell system is indeed a classic case of anti trust settlement and constitutes one of the most prominent and controversial applications of microeconomics to public policy it is argued that demanding multi output cost properties such as economies of scope for this is the considerable robustness problem displayed by the tranlog cost functional form the reason for this is the considerable able to robustness problem displayed by the translog cost function which is the source underlying many of the expert disagreements it is suggested that the non robustness is due to what ils termed the flip flop property and it is shown that the available empirical evidence from the pre divestiture bell system supports this argument to obtain robust results we propose that the analysis is constrained to the proper region of the cost function we propose that the analysis is con

the role of fixed costs and cost complementarities in determining scope economies and the cost of narrow banking proposals narrow banking proposals would separate insured deposits from most types of bank lending using data from large u s banks the authors examine the extent to which narrow banking proposals are likely to result in increased production costs production costs will rise for nonjoint provision of deposit and loan services if there are cost complementarities in producing the two outputs jointly or if joint production enables banks to spread their fixed costs more effectively unlike standard cost function approaches the authors methods allow them to estimate the fixed cost and cost complementarity effects separately they find the net production cost consequences of narrow banking to be negligible copyright 1993 by university of chicago press

the circular economy swings and roundabouts abstract in the last few decades the circular economy has increasingly been advertised as an economic model that can replace the current linear economy whilst addressing the issues of environmental deterioration social equity and long term economic growth with the explicit suggestion that it can serve as a tool for sustainable development however despite the individual prominence of the circular economy and sustainable development in the academic and wider literature the exact relationship between the two concepts has neither been thoroughly defined nor explored the consequent result is various inconsistencies occurring across the literature regarding how the circular economy can serve as a tool for sustainable development and an incomplete understanding of how its long term effects differ from those of the linear economy a literature review was conducted to interpret the current conceptual relationship between the circular economy and sustainable development the review highlights numerous challenges concerning conceptual definition economic growth and implementation that inhibit the use of the circular economy as a tool for sustainable development in its current form the review concludes by providing suggestions for how research concerning the circular economy should proceed if it is to provide a potential approach for achieving sustainable development

economies of diversification a generalization and decomposition of economies of scope abstract the paper investigates the benefits of diversification for a multi product firm it examines economies of diversification reflecting the cost reduction associated with producing outputs in an integrated firm compared to specialized firms the analysis applies under complete specialization as well as partial specialization when firms are not fully specialized and or when the specialization scheme does not cover all outputs it decomposes economies of diversification into four additive parts a part measuring complementarity among outputs a part reflecting economies of scale a part reflecting convexity and a part reflecting the role of fixed cost this new decomposition appears useful in investigating how scale effects complementarity effects and convexity effects can contribute to economies of scope in a multiproduct firm and helps generate valuable insights into the economics of specialization for multiproduct firms

duality theory for variable costs in joint production duality methods for incomplete systems of consumer demand equations are adapted to the dual structure of variable cost functions in joint production this allows identification of necessary and sufficient restrictions on technology and cost so that con ditional factor demands can be written as functions of input prices fixed inputs and cost these are observable when variable inputs are chosen and committed to production hence the identified restrictions allow ex ante conditional demands to be studied using observable data this class of production technologies is consistent with all von neu mann morgenstern utility functions when ex post production and or output prices are un certain

competition and allocative efficiency the case of the u s telephone industry this study investigates the effect of competition on the productive efficiency of the u s telephone industry taking into account the fact that the industry was subject to rate of return regulation it is shown that competition induces the incumbents to use capital inputs closer to the unconstrained optima thereby reducing the allocative inefficiency caused by the averch johnson effect this effect is in addition to the usual technical efficiency improvement induced by competition empirical results based on annual data for the u s telephone industry for the 1951 90 period suggested that competition improved the allocative efficiency of the incumbent firms which had been under a rate of return regulation until 1989 copyright 1995 by mit press

theories of non profit institutions abstract as thoughtful modelling and empirical research of non profit enterprises continues to grow two general views of non profit organizations are emerging one view is that non profit firms are inefficient and wasteful another view is that non profit firms are a response to market failure and thus may improve efficiency the purpose of this paper is to explore the theoretical and empirical work that represents the current divided state of thinking in this area

the sustainable development index measuring the ecological efficiency of human development in the anthropocene abstract when the human development index hdi was introduced in the 1990s it was an important step toward a more sensible measure of progress one defined less by gdp growth and more by social goals but the limitations of hdi have become clear in the 21st century given a growing crisis of climate change and ecological breakdown hdi pays no attention to ecology and retains an emphasis on high levels of income that given strong correlations between income and ecological impact violates sustainability principles the countries that score highest on the hdi also contribute most in per capita terms to climate change and other forms of ecological breakdown in this sense hdi promotes a model of development that is empirically incompatible with ecological stability and impossible to universalize in this paper i propose an alternative index that corrects for these problems the sustainable development index sdi the sdi retains the base formula of the hdi but places a sufficiency threshold on per capita income and divides by two key indicators of ecological impact co2 emissions and material footprint both calculated in per capita consumption based terms and rendered vis a vis planetary boundaries the sdi is an indicator of strong sustainability that measures nations ecological efficiency in delivering human development

nonparametric analysis of cost complementarities in the telecommunications industry the market structure of the telephone industry has been the focus of a large body of empirical research following the divestiture of at t in 1984 using data on local exchange carriers lecs i estimate the total cost function of lecs operating between 1988 and 1995 first i show that cost complementarities can be nonparametrically identi ed in many situations where economies of scope and subadditivity which were the focus of previous empirical research cannot be identi ed next i propose a feasible estimation model taking into account all the properties that a cost function needs to satisfy according to economic theory the telephone companies are treated as multi product rms producing two outputs local and toll calls the results support the assumption that cost complementarities exist in the production of these two outputs the amounts of complementarities are computed and shown to be bigger for small companies

a test for cross subsidies in local telephone rates do business customers subsidize residential customers recent regulatory and technological changes suggest that the local telecommunications market may soon present opportunities for profitable entry bypass activity by businesses combined with the generally higher business rates suggests that business service revenues may be subsidizing residential access to the local network before regulators allow wide scale entry into local telecommunications they need to know if local phone service rates exhibit cross subsidies using data supplied by new england telephone this article tests a new set of sufficient conditions for cross subsidization that do not require observations on stand alone cost the results indicate that business service revenues subsidize residential service provision at nearly 65 of the suburban central offices the sufficient conditions for a residential to business cross subsidy fail for all central offices in the sample

testing for subadditivity of vertically integrated electric utilities the public policy debate over electric utility deregulation has a long history and generated a considerable amount of research much of this research focused on estimating the degree of scale economies in generation with little attention given to the effect vertical integration may have on cost structure the vertical integration issue is important because most observers consider the transmission and distribution stages to be natural monopolies according to joskow and schmalensee economics of integration if any would link the production stages together possibly extending natural monopoly conditions from transmission distribution to generation even if the latter exhibited no economies of scale 27 refs 5 tabs

hospital efficiency and indigent care 1990 hospital efficiency and indigent care applied economics vol 22 no 11 pp 1597 1610

the public accounting industry production function abstract a translog function is specified to represent the relation between revenue and human resource inputs in public accounting firms estimation of the model using a balanced panel of annual data for 64 large cpa firms for the period 1995 1999 indicates that increasing returns to scale prevail in the public accounting industry justifying recent merger and acquisition activities among accounting firms average marginal revenue product of partners increased monotonically from 1995 to 1998 decreased slightly in 1999 and was about nine times that of other professionals during 1995 1999 the public accounting industry exhibited continuing improvement in productivity over the 5 years

measuring productive efficiency in multiple product agribusiness firms a dual approach measuring retail fertilizer plant efficiency is difficult given the range of outputs produced by these multiple product firms a frontier multiproduct cost function was employed to measure productive efficiency results suggest the average plant could lower variable costs by 10 through more effective operations allocative inefficiency was minimal indicating management should focus on improving technical efficiency the limitations of employing a single product model in a multiproduct situation are demonstrated

divestiture of nippon telegraph and telephone this article discusses whether the japanese government should break up ntt nippon telegraph telephone in 1995 as the u s federal government compelled at t american telephone telegram to break itself into toll and local telephone companies in 1984 the divestiture of ntt has long been a major industrial policy issue in japan since the common carrier was privatized in 1985 the governmental decision to divest it may influence not only the japanese telecommunications infrastructure but also the global telecommunications and information industries in the world where many common carriers are now facing an environmental change from regulation to competition a unique feature of this study is that it employs eight different estimation techniques to obtain a cost function of ntt so that this research avoids a methodological bias occurring in many empirical studies this study confirms that ntt has maintained cost subadditivity but it has failed to establish the status of a natural monopoly in the observed time period however it also finds that the ntt divestiture will not produce a price reducing benefit to japanese telecommunications consumers this research result will serve as empirical evidence for guiding the governmental review of this large scale industrial policy issue in japan

an analysis of returns to scale in public production with an application to fire protection abstract this paper analyzes returns to scale in public production existing studies fail to differentiate among three dimensions of scale service quality the level of governmental activity and the number of people served a fourth dimension economies of scope is need for agencies that provide multiple services this paper provides a formal definition of returns to scale for each dimension this framework is applied to fire protection using a translog cost function with two services fire prevention and fire suppression the results indicate economies of scope increasing returns to quality scale and constant returns to population scale

australia s genuine progress indicator revisited 1962 2013 abstract the genuine progress indicator gpi has been proposed as an alternative to gdp as an indicator of national progress gpi includes 26 components that adjust gdp for inequality include household and volunteer work and subtract a number of social and environmental costs best seen as negatives the gpi has been estimated for over 20 countries and many states and territories this paper updates australia s gpi to determine whether australia as a nation has progressed overall since the 1960s and compares two alternative approaches that differ in some important details we find that despite these differing approaches we find that gpi remained largely stagnant from the 1960s through to the 1990s and only at the turn of the century has gpi started to increase despite increasing negative environmental costs while gpi is well placed to serve as an improved australian and global measure of national progress further work is needed to measure national well being and support its integration into political decision making and to include the full range of subjective and objective indicators ultimately this paper argues that while gpi is well placed to serve as a new australian and global measure of well being we stress the need for an alternative indicator like gpi to supplement gdp and to better inform policy decisions

economics in the anthropocene species extinction or steady state economics abstract at the dawn of the anthropocene continued economic growth carries the risk of irreversibly damaging the global carrying capacity using data from the international union for the conservation of nature red list of threatened species 2016 i present estimates of the expected extinction rates during the coming century for 557 regions i illustrate that these rates exceed the planetary boundary formulated by rockstrom et al 2009 virtually everywhere and increase with population density and gdp per capita likewise the percentage of threatened species increases with anthropogenic pressure i find no evidence in support of an environmental kuznets curve by doing so this paper contributes to an ongoing debate on the relevance of absolute versus relative scarcity for economic thought my findings suggest that the conservation of nature would benefit from degrowth or the transition to a global steady state economy

hospital scale economies due to stochastic demand and service abstract this paper uses queuing theory to approximate empirically the potential for hospital scale economies due to the stochastic nature of hospital demand and service these results suggest that scale economies due to stochastic demand and service are likely to be important only for the consolidation of small specialized hospital units

multi product costs and standby capacity derived from queuing theory the case of belgian hospitals empirical hospital cost function studies can be divided into two categories studies estimating traditional multi product cost functions and studies including demand uncertainty assuming that hospitals provide standby capacity to cope with uncertain demand and stressing that the relationship between the uncertain demand excess capacity and costs should be investigated most studies include the inverse of the occupancy rate in a relatively basic cost function the first contribution of this paper is to incorporate an indicator of reserve capacity into a genuine multi product cost function the second contribution is to propose an alternative indicator to proxy the reserve margin the often used occupancy rate has an important shortcoming the same occupancy rate can hide different turnaway probabilities and waiting times obscuring the true degree of reservation quality since turnaway probabilities and waiting times are typical queuing theory indicators an indicator for average waiting time derived

unnatural monopolies in local telephone we attempt to overcome the serious data problems of past telecommunications cost studies by focusing on local exchange carriers lecs with enough degrees offreedom to yield precise estimates our global subadditivity tests show that the cost function is definitely not subadditive the results suggest that the benefits to breaking up the monopoly outputs of existing lecs substantially outweigh the potential losses in efficiency they also support permitting entry and increasing competition in local exchange markets furthermore given the competitive nature of long distance service it is doubtful that the predivestiture bell system was a natural monopoly

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

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

a multiproduct cost study of savings and loans this paper investigates the cost structure of savings and loans most studies of financial institutions have failed to take into account the multiproduct nature of these institutions using the multiproduct approach the existence of subadditivity multiproduct global and product specific economies of scale and scope and substitutability between inputs is investigated a translogarithmic cost function is estimated using 1982 data on california savings and loans restrictive functional forms also estimated are rejected standard errors for the statistics calculated are estimated and various statistical tests are conducted previous authors have not calculated standard errors for these statistics no evidence of subadditivity in the industry is found in order to investigate the impact of deregulation on the financial services industry it is necessary to know the cost structure of the industry optimal firm size and product mix can be determined once the structure is known the presence of scale economies would imply that smaller firms or entering firms that operate at a small scale would be at a cost disadvantage compared with larger established firms a finding of economies of scope i e economies of joint production would imply that firms that were specialized would be at a cost disadvantage and that regulations that restrict the outputs a firm is allowed to produce may lead to inefficient production

higher wages for sustainable development employment and carbon effects of paying a living wage in global apparel supply chains abstract in this paper we explore how paying a living wage in global supply chains might affect employment and carbon emissions sustainable development goals 8 and 13 previous work has advocated using wage increases for poorer workers to increase prices for wealthier consumers thereby reducing consumption and associated environmental damage however the likely effects of such an approach remain unclear using an input output framework extended with income and demand elasticities we estimate the employment and carbon effects of paying a living wage to brazilian russian indian and chinese bric workers in the western european clothing supply chain we find negligible effects on carbon emissions but a substantial increase in bric employment under 3 scenarios of consumer behaviour changes in western european consumption lead to small decreases in global carbon emissions and bric employment however the increase in bric wages increases demand in bric this increased demand increases production which largely cancels out the carbon savings and generates net increases in bric employment we conclude by arguing that paying higher wages in global supply chains represents a good but not sufficient step toward achieving the sustainable development goals

have countries moved towards sustainable development or not definition criteria indicators and empirical analysis abstract have countries moved towards sustainable development sd or not to answer the question first a new sd definition i e achieving higher and more equally distributed well being levels within ecological limits is proposed second based on the definition and from a global perspective four criteria are established to judge whether countries have moved towards sd which are 1 well being levels have been higher and more equally distributed 2 levels of ecological consumption have been lower 3 ecological capacities have strengthened and 4 the ultimate efficiency which is the efficiency of transforming ecological consumption into human well being has improved developing countries with ecological consumption below global average do not have to meet the second criterion third the happy and equal human development index the ecological footprint and the biocapacity are selected to measure human well being ecological consumption and ecological capacities respectively and two consistent methods are used to measure the ultimate efficiency the empirical analysis of 102 countries during 2011 2016 demonstrates that 19 countries have met the required four or three criteria and moved towards sd and that 12 countries have met none of the required criteria and moved against sd the main contribution is to provide a clear sd definition specific criteria and reliable indicators for measuring national performance and informing decision making on moving towards sd therefore whether countries have moved towards sd or not can be judged and measured continuously and regularly future research needs to detailedly explore why countries have met or not met one certain criterion

industrial structure in us telecommunications some empirical evidence the telecommunications industry in the us is re assessed using a methodology which incorporates new developments in time series analysis the issue of natural monopoly is re considered with a view to the validation of the use of applied econometry in the fields of divestiture and industrial policy recent developments in us telecommunications are considered and incorporated into the model

economies of diversification in the banking industry abstract this paper defines a new measure economies of diversification to examine the cost effect of product line expansion this measure is a special case of expansion path subadditivity and contains economies of scope as a special case a nonparametric frontier technique which isolates the effects of inefficiency and scale is used to measure economies of diversification applied to a set of 468 u s depository institutions operating in 1984 we find slight diseconomies of diversification diseconomies of diversification and inefficiency due to the overutilization of resources are found to be more important determinants of bank costs than is the failure to operate at optimal scale

multiple output production and pricing in electric utilities empirical studies of the electric utility industry have generally focused on one of several issues such as the presence or absence of regulation induced input mix distortions the rules used to select regulated prices whether electricity is one output or several or the naturalness of the electric utility monopoly this paper contributes a method which permits simultaneous estimation of demand elasticities pricing rule parameters and marginal rates of transformation within one econometric model since firms make input and output decisions given the demand and regulatory conditions facing them the marginal rates of substitution and transformation are dependent on the demand elasticities of each consumer class and the prices permitted by regulators its purposes are two first i examine the appropriateness of a multiple output model of production is electricity one output or are the products sold to different consumers distinct outputs most but not all previous studies treat electricity as a homogeneous product 2 while this assumption may be justified for studies which deal strictly with generation of electricity joskow and schmalensee 27 54 5 observe3 that

structural reform of japanese electric power industry separation between generation and transmission distribution this study examines the cost structure of japanese electric power industry to investigate whether a structural reform on the industry really enhances a cost saving benefit to consumers a composite cost function model using a panel data set is used for this study the data set consists of nine electric power companies from 1990 to 2008 based upon the estimation results this study examines whether economies of scale and vertical economies exist in the industry then this study conducts a cost subadditivity test that is a necessary condition of natural monopoly the empirical results indicate that the electric power firms exhibit the status of economies of scale in their transmissions and distributions and the operation as a whole however they do not exhibit economies of scale in their generations thus the transmission operation by integration in a large area can improve its economic efficiency furthermore the industry should introduce more competition in both generation and wholesale power markets where more firms can participate in their power trades this study also empirically confirms that vertical economies have existed in the industry moreover this study confirms that all the estimates in the cost subadditivity test satisfy the necessary condition of natural monopoly where each estimate indicates cost saving in cost subadditivity the test does not guarantee a sufficient condition of natural monopoly however it clearly indicates that the functional separation between generation and transmission will increase total production cost in the industry the complete separation may result in a net loss of economic efficiency if a competition benefit does not exceed an expected economic loss consequently this study suggests that the industrial structure of future japanese electric power industry should be evaluated from not only an expected benefit by introducing competition but also an unbundling cost that occurs with a loss of vertical integration

the economic threshold with a stochastic pest population a real options approach using real options this paper formulates an optimal stopping model for applying pest control measures when the density of a pest population varies randomly a delay between successive pesticide applications is introduced to analyze the farmer s expected marginal cost of reentry this model is applied to the control of a foliar pest of apples via a pesticide and solved numerically a sensitivity analysis shows that the pest density that should trigger pesticide use can vary significantly with the pest density volatility incorporating pest randomness into simple decision rules may thus help better manage the chemicals applied to soils and crops

rejoinder natural monopoly and the bell system response to charnes cooper and sueyoshi our study of the bell system cost function shows that it is possible to reject the hypothesis that at t was a natural monopoly our study is based on a regression analysis of a translog cost function estimated on 1947 1977 data charnes cooper and sueyoshi charnes a w w cooper t sueyoshi 1988 a goal programming constrained regression review of the bell system breakup management sci 34 1 26 claim that they reverse our conclusion when they use goal programming estimators of a translog cost function estimated on exactly the same data that we use this claim is false there is no basis for comparing our estimates with their estimates because they in fact use different data than we use and estimate a different cost function than we estimate moreover when goal programming estimates and regression estimates based on the same data and similar cost function specifications are compared they yield similar estimates and produce the same inference about natural monopoly

off farm labour and the structure of us agriculture the case of corn soybean farms while the growing importance of off farm earnings suggests large benefits accrue to farmers from efforts to expand off farm income opportunities economic well being also depends on greater efficiency to comprehensively gauge the economic health of farm operator households off farm income is interpreted as an output along with corn soybeans livestock and other crops to accomplish this task two related methodologies were used first using 2000 data a multi activity cost function was set up to analyse labour allocation decisions within the farm operator household and also to estimate returns to scale and scope second using 1996 2000 data an input distance function approach was followed to estimate returns to scale cost economies and technical efficiency and the relative performance of farm operator households with and without off farm wages and salaries compared the cost function and input distance function results both suggest that off farm outputs and inputs can be modelled in a multi activi

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

goal programming regulation and generalised economies of scale and scope abstract in this paper a new class of goal programming models are employed to define economies of scale and scope first with reference to distribution models and then with reference to more general linear and nonlinear goal programming models applications to interregional production regulation and exchange are provided and in every case these models yield competitive results as special cases but in their general form the models and associated results correspond to appropriately regulated market conditions with regulation being determined inter alia by means of appropriate supply and or demand goal oriented taxes and subsidies

a natural monopoly in natural gas transmission abstract in this article we test for subadditivity in the cost structure associated with transporting natural gas by trans canada pipelines ltd and measure for possible cost savings from increased competition that could be realized by removing the monopoly status granted by the national energy board in measuring subadditivity we apply both the baumol et al contestable markets and the theory of industry structure 1982 and the evans and heckman am econ rev 764 1984 613 procedures our results show evidence of subadditivity in the cost structure and consequently the possible benefits from increased competition resulting from splitting up the monopoly could be offset by the sacrifice of scale efficiencies

measuring economies of scope for cogeneration systems in korea a nonparametric approach this study empirically identifies the existence and the degree of economies of scope for cogeneration systems in korea we derive the index of economies of scope and estimate it by using a nonparametric approach of linear programming method based on the empirical results we explicitly present that there exist economies of scope for cogeneration in korea with total cost reduction of 13 1 in addition we show that the cost saving effects from the jointness in capital and labor are also significant in addition to that in fuel

measuring development with inequality how should aggregate indicators of development account for inequality abstract the paper analyzes how inequality is accounted for in aggregate indicators of development and whether and how it should be used the motivation behind the study stems from the renewed interest in inequality in academia public discourse and in global policy first we argue that inequality should be considered when constructing development indicators the role of distribution in development is important both because people generally prefer lower inequality and inequality tends to have negative effects on development outcomes second we analyze how ten selected development indicators account for inequality in terms of justification type of inequality measure of inequality and method of incorporation and what the strengths and weaknesses of different approaches are we found considerable diversity especially for inequality measures and methods of incorporation as for the type of inequality inequality of opportunities is considered marginally and overlapping inequalities not at all increasing data availability opens the door for inclusion especially for the latter aspect as most indicators suffer from insufficient methodological substantiation we argue for increased clarity regarding why and how inequality is accounted for in development indicators the analysis is complemented by a detailed review of treatment of inequality by the analyzed indicators annex

production technology costs and multiproduct industry structure an application of the long run profit function to the new england fishing industry the long run multiproduct profit function is developed to provide a more general procedure than the static minimum cost function to examine the technological and cost determinants of multiproduct industry structure and the likely form of any market equilibrium in this approach outputs are endogenous and the long run equilibrium levels of quasi fixed factors are endogenously determined the multiproduct structure of the multispecies new england fishing industry and the likely multi

the economics of reentry regulation of pesticides government agencies frequently try to protect the public from industrial hazards by separating the two in time and or space this paper develops a methodology for one such policy reentry regulation of pesticides re entry regulation is shown to provide a rational incentive for preventive applications of pesticides a practice usually attributed to risk aversion or inadequate information the tradeoffs between farm worker poisonings and lost grower revenue are shown to be substantial weather dependent location specific reentry regulation appears superior to the uniform regulation now in effect

estimating multiproduct and product specific scale economies for agricultural cooperatives this article estimates multiproduct and product specific scale economies scope economies and cost efficiency with single and annual cost frontiers using a nonparametric approach multiproduct scale and scope economies are found that suggests increasing scale and product diversification can reduce cost for agricultural cooperatives many agricultural cooperatives experience economies of scale indicating that variable returns to scale as opposed to constant returns to scale is the appropriate technology for modeling agricultural cooperatives product specific scale economies for all outputs are close to one indicating that individual outputs are operating close to constant returns to scale annual frontier estimates show that cooperatives have become less cost efficient over time but scale and scope economies remain relatively consistent across years further results show that economic measures obtained from the single frontier are statistically different from those measures calculated from annual frontiers suggesting that the cost frontier has shifted over time the trade off between cost efficiency and multiproduct scale economies indicates that smaller cooperatives can reduce a higher percentage of cost by increasing the scale of operations rather than just becoming cost efficient because larger incentives exist for small cooperatives to increase scale mergers will likely continue until economies of scale are exhausted in the industry

telecommunications deregulation and subadditive costs are local telephone monopolies unnatural abstract in early 1996 congress passed the telecommunications law providing the foundation for the opening of regulated local telephone monopolies to competition one important premise for introducing competition into local telephone markets is that these markets are not or are no longer natural monopolies this paper reexamines the natural monopoly issue using a cost function that controls for firm heterogeneity our subadditivity tests suggest that local exchange carriers lecs costs are subadditive when there are controls for unobserved heterogeneity suggesting that local telephone markets are natural monopoly markets

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

labour and capital saving technical change in telecommunications the australian telecommunications sector is being improved and extended through substantial recent investment in intelligent technology such as digital switching fibre optics satellite and cellular transmission and the internet these technologies are being progressively integrated with technology from the broadcasting computer and electronics industries providing a unified information infrastructure for information transmission and processing technological progress embodied in new equipment has the effect of increasing the efficiency of the factors of production such efficiency increases can be biased towards a particular factor for instance the impact of labour augmenting technical change is a decline in the cost of labour per unit of production when such biases are apparent the relativity between the costs of labour and capital per unit of production is changed in the longer term technical change can impact on the rate of employment growth and also on the rate of capital accumulation in th

economies of scale and scope and the economic efficiency of china s agricultural research system this article investigates economies of scale and scope and other potential sources of improvements in the economic efficiency of china s crop breeding an industry at the heart of the nation s food economy using data covering 46 wheatand maize breeding institutes from 1981 to 2000 we estimate cost functions for the production of new varieties at china s wheat and maize breeding institutes our results indicate strong economies of scale along with small to moderate economies of scope related to the joint production of new wheat and maize varieties cost efficiency increases significantly with increases in the breeders educational status and with increases in access to genetic materials from outside the institute

compact bidding languages and supplier selection for markets with economies of scale and scope preference elicitation is a fundamental problem in single unit combinatorial auctions but it becomes prohibitive even for small instances of multi unit combinatorial auctions the bidders cannot express their preferences exactly as this would take a huge number of bids typically leading to inefficient allocations hence markets with economies of scale and scope require more compact and yet expressive bidding languages in this thesis we propose an expressive bidding language allowing bidders to describe the characteristics of their cost functions bidders in these auctions can specify various discounts and markups and specify pricing rules as logical functions finding the optimal allocation given these pricing rules is a strongly np hard optimization problem and we propose a mixed integer program to solve it based on field data we introduce a multi item cost function and provide extensive computational experiments to explore the computational burden and the impact of different language features on the computational effort and total spend of the auctioneer in addition we explore characteristics of the knowledge representation of the bidding language

measuring the marginal cost of nonuniform environmental regulations a method is presented for measuring the marginal welfare cost of environmental regulations affecting agriculture the method incorporates output market effects and recognizes diversity in production conditions among crops regions and seasons an important advantage of the method is that only regional outputs and changes in regional production costs are needed to calculate deadweight loss thus simplifying the measurement of welfare changes this feature of the model is significant since the complexity and substantial data requirements of most existing impact models cause many environmental regulations to be enacted with inadequate analysis of their economic impacts the method also disaggregates welfare impacts by crop place and time thus encouraging the implementation of nonuniform interventions that achieve a given level of environmental quality more efficiently than uniform policies

payment source and the cost of hospital care evidence from a multiproduct cost function with multiple payers abstract this study investigates the capacity of hospitals to vary the intensity of their services based on patients expected sources of payment while the concept of price discrimination by hospitals based on payer generosity cost shifting has been discussed extensively the notion that hospitals can adjust payer specific marginal costs to reflect differences in reimbursement policies has not been studied in depth to examine this issue this analysis employs a multiproduct cost function with hospital outputs defined as admissions by payment source controlling for the distribution and severity of illness casemix for each payer marginal costs of casemix adjusted discharges are obtained and compared for medicare medicaid private payers and a residual category that includes uncompensated care we find that indeed payer specific marginal costs generally reflect payer generosity

a two stage translog marginal cost pricing approach for floridian hospital outputs since the passage of the affordable care act aca of 2010 issues still remain regarding the mandated purchase of insurance to ensure more universal coverage one such issue is the pricing of these insurance packages and whether or not the reimbursements will cover necessary services therefore policy concerns exist that increasing the number of insured individuals may not curtail costs conversely providers may not wish to treat patients covered by excessively frugal plans such as medicaid hence the trade offs between access and cost control in this article we present findings from a cost function and a productivity approach to determine the marginal cost of providing inpatient hospital care for hospitals operating in florida during 2005 using these methodological approaches we are able to use the marginal rate of transformation to determine the relative marginal costs while controlling for hospital technical and allocative inefficiency our work differs from earlier articles as we avoid the greene problem for cross sectional models through a two step approach by including both reimbursement rates under conditions of hospital efficiency we can ascertain payment schemes that should at least in theory cover necessary costs for patient care without leading to excessive input usage

a further critique of growth economics is aggregate physical growth still economic as it was in the empty world or has it become uneconomic as we have moved into the full world era first i discuss why this critical question has been ignored by mainstream economists and policy makers second i consider 11 fallacies or anomalies that confuse reasoning about economic growth and undercut the current policy presumption in its favor

multiproduct cost relationships for retail fertilizer plants volume cost relationships developed from the statistical analysis of accounting data have long provided useful information for evaluating firm efficiency french previous descriptive and statistical analyses of accounting data as well as economic engineering cost studies of retail fertilizer firms have focused on a single product line anderson and miller raikes and heubrock williams foster and simpson service o rourke or have simply summarized industry accounting data akridge and downey problems associated with using accounting data to estimate statistical cost functions include a the failure to handle satisfactorily multiproduct firm cost relationships

dept and input misallocation of agricultural supply and marketing cooperatives kim and maksimovic provide an empirical model to examine the effect of dept on a firm their model is adopted to examine agricultural supply and marketing cooperatives using a short run variable cost function we find firm efficiency decreases as dept increases a us 1 increase in indebtedness increases total short run variable costs by us 0 0167 or roughly 1 67 dept tends to shift input usage away from labour inputs a test developed by conrad and unger is applied to determine whether the agricultural supply and marketing cooperatives are at a long run equilibrium capacity it is found that most of the cooperatives were overinvested in capacity however dept does not explain this overinvestment finally the effect of dept on total productivity over the study period is examined it is found that dept has had a small positive impact on total factor productivity growth scale economics and non optimal capacity had large impacts on total factor productivity although dept is associated with short run misal

linking daly s proposition to policymaking for sustainable development indicators and pathways abstract the statement that in the full world increasing the ultimate efficiency expressed as service throughput is the necessary condition for humanity to achieve high levels of well being within ecological limits is honoured as daly s proposition in this paper the purpose of this paper is to make daly s proposition effective guidance for policymaking related to sustainable development for this aim this paper puts forward the indicator ecological well being performance which is composed of the human development index and the ecological footprint to measure the ultimate efficiency furthermore by means of matrix analysis and factor decomposition analysis the respective pathways for countries at different stages of development to make the sustainable development transition were discussed the g20 countries were taken as the cases to conduct the research the empirical results show that improvements in well being and increases in throughput level are not necessarily positively related the relationship between the two depends on how countries control throughput levels and improve the ecological well being performance which also explains different performances on the sustainable development transition in a simple way this contribution provides new methods and criteria to track and evaluate national performance on sustainable development by referring to daly s original theories

renewable non renewable energy consumption economic growth trade openness and ecological footprint evidence from organisation for economic co operation and development countries the purpose of this study is to examine the validity of environmental kuznets curve hypothesis for ecological footprint with the role of renewable energy use non renewable energy use and trade openness in 24 organisation for economic co operation and development countries for this purpose we investigate the period from 1980 to 2014 using with second generation panel data methodologies which allow to cross sectional dependence among countries the group mean results show that the inverted u shaped environmental kuznets curve hypothesis does not hold in organisation for economic co operation and development countries because we found the u shaped relationship between economic growth and ecological footprint in addition it is concluded that increasing renewable energy consumption reduces ecological footprint and increasing non renewable energy consumption increases environmental degradation

the bell system divestiture deregulation and the efficiency of the operating companies abstract a variety of casual evidence has been offered in measurement of the efficiencies and inefficiencies thought to flow from the bell system divestiture and accompanying state regulatory reforms to address several questions in this regard we estimate a regulated cost function for local exchange services using panel data on the divested bell operating companies bocs divestiture and regulatory reform are found to have produced significant efficiencies as of 1993 saving about 20 percent in cost relative to what would have obtained in the absence of these events more specifically to 1993 the divestiture yielded savings of 115 4 billion and state level regulatory reform yielded a slightly smaller 96 7 billion in savings both measured in 1993 dollars output augmentation factor bias and allowed rate of return effects contribute in identified ways to these overall results

standard incentive regulation hinders the integration of renewable energy generation the connection and distribution of growing decentralized electricity generation from renewable energy sources res e is leading tomassive investment needs besides investing in additional conventional assets e g cables grid operators can also invest in innovative smart solutions like local storage capacities or voltage regulation appliances which may be a more suitable way of integrating res e this paper investigates the influence of incentive regulation on the investment decision of grid operators to integrate res e we describe the technical and regulatory background explain the advantages of smart solutions and present an approach for comparing investment scenarios as an example we calculate the profitability of investments in a case study of the german electricity market we apply data envelopment analysis dea and stochastic frontier analysis sfa to show the influence of the investment alternatives on grid operator efficiency objectives we demonstrate that under current standard incentive regulation the grid operators gain profitability by avoiding investments and if they are forced to invest by not implementing smart solutions the results highlight the need to consider innovation in the regulation design further research should investigate specific instruments that can be used to account for innovation our brief discussion of such instruments provides a starting point

market structure and the role of consumer information in the physician services industry an empirical test abstract this paper applies panzar and rosse s 1987 econometric test of market structure to examine two long debated issues what is the market structure for physician services do more physicians in a market area raise the search cost of obtaining consumer information and increase prices satterthwaite 1979 1985 for primary care and general and family practice physicians the monopolistically competitive model prevailed over the competing hypotheses monopoly perfect competition and monopolistic competition characterized by consumer informational confusion although less conclusive there is some evidence to support the monopolistically competitive model for surgeons and the consumer informational confusion model for internal medicine physicians

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