Economies of Scale in Multi-product Firms: An Empirical Analysis
AbstractThis paper presents new evidence on scale economies in multiproduct firms. Previous studies are limited in view of r ecent advances in the theory of the multiproduct firm. The water util ity is chosen here as a multiproduct firm providing multiple services to various classes of customers with spatial variation. A translog m ultiproduct cost function is estimated, based on duality between tran sformation and cost functions. The paper analyzes overall, as well as product-specific, scale economies. It also discusses ray average cos t curves and derives the M locus which provides useful information on scope economies and the cost-minimizing number of firms. Copyright 1987 by The Review of Economic Studies Limited.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 54 (1987)
Issue (Month): 214 (May)
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