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Estimating multiproduct costs when some outputs are not produced

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  • Quinn Weninger

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Abstract

Pooling diversified and specialized firm data to analyze multiproduct cost technologies raises two issues in applied research: (1) a functional form must be specified that accommodates zero outputs, and (2) assumptions must be made regarding the structure of the multiproduct technology when some outputs are not produced. This article introduces a methodology to estimate the translog multiproduct cost function in the presence of zero outputs. The method adds flexibility to allow for and test competing structural assumptions. The added flexibility can improve measurement of the global properties of multiproduct cost structures. An application to a cross section of U.S. railway firms demonstrates this key advantage. Copyright Springer-Verlag 2003

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File URL: http://hdl.handle.net/10.1007/s00181-003-0157-5
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Bibliographic Info

Article provided by Springer in its journal Empirical Economics.

Volume (Year): 28 (2003)
Issue (Month): 4 (November)
Pages: 753-765

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Handle: RePEc:spr:empeco:v:28:y:2003:i:4:p:753-765

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Keywords: Translog multiproduct cost function;

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Cited by:
  1. Estache, Antonio & Iimi, Atsushi, 2009. "(UN)Bundling infrastructure procurement : evidence from water supply and sewage projects," Policy Research Working Paper Series 4854, The World Bank.
  2. Mehdi Farsi & Massimo Filippini, 2008. "Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 335-350.
  3. Anna Bottasso & Maurizio Conti & Massimiliano Piacenza & Davide Vannoni, 2010. "The Appropriateness of the Poolability Assumption for Multiproduct Technologies: Evidence from the English Water and Sewerage Utilities," Carlo Alberto Notebooks 183, Collegio Carlo Alberto.
  4. Kuo, Jenn-Shyong & Ho, Yi-Cheng, 2008. "The cost efficiency impact of the university operation fund on public universities in Taiwan," Economics of Education Review, Elsevier, vol. 27(5), pages 603-612, October.
  5. Peter Boenisch & Sven Tagge, 2012. "The Optimal Size of German Child Care Centers and the Impact of Regulation: Estimating the Cost Function of a Regulated Mulzi-Product Firm," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 232(5), pages 545-566, September.
  6. Ollinger, Michael & Ralston, Katherine L. & Guthrie, Joanne F., 2012. "Location, School Characteristics, and the Cost of School Meals," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(3), December.
  7. Thomas Triebs & David S. Saal & Pablo Arocena & Subal C. Kumbhakar, 2012. "Estimating Economies of Scale and Scope with Flexible Technology," Ifo Working Paper Series Ifo Working Paper No. 142, Ifo Institute for Economic Research at the University of Munich.
  8. Dono, Gabriele & Giraldo, Luca, 2011. "Cost Analysis for Water Distribution in Agriculture," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114435, European Association of Agricultural Economists.

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