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Economies of scope in Portuguese local government using an augmented Hicks–Moorsteen approach

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  • Paulo Caldas
  • Diogo Ferreira
  • Brian Dollery
  • Rui Marques

Abstract

Whereas a substantial empirical literature has investigated scale economies in local government, by contrast little effort has been directed at economies of scope. To address this gap in the literature, this paper empirically examines economies of scope in 308 Portuguese local governments and the extent to which it explains differential council performance. We employ a new methodology using geometric distance functions, an augmented Hicks–Moorsteen index, and partial frontiers for (in)efficiency assessment in local government. The results demonstrate that most councils that ‘externalize’ service provision face diseconomies of scope, which increase in proportion to the externalization of service provision.

Suggested Citation

  • Paulo Caldas & Diogo Ferreira & Brian Dollery & Rui Marques, 2019. "Economies of scope in Portuguese local government using an augmented Hicks–Moorsteen approach," Regional Studies, Taylor & Francis Journals, vol. 53(7), pages 963-976, July.
    • Handle: RePEc:taf:regstd:v:53:y:2019:i:7:p:963-976
    DOI: 10.1080/00343404.2018.1508872
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    Cited by:

    1. Vardanyan, Michael & Valdmanis, Vivian G. & Leleu, Hervé & Ferrier, Gary D., 2022. "Estimating technology characteristics of the U.S. hospital industry using directional distance functions with optimal directions," Omega, Elsevier, vol. 113(C).
    2. Kao, Chiang & Pang, Rui-Zhi & Liu, Shiang-Tai & Bai, Xue-Jie, 2021. "Optimal expansion paths for hospitals of different types: Viewpoint of scope economies and evidence from Chinese hospitals," European Journal of Operational Research, Elsevier, vol. 289(2), pages 628-638.
    3. Tourinho, Marco & Santos, Paulo Rosa & Pinto, Francisco Taveira & Camanho, Ana S., 2022. "Performance assessment of water services in Brazilian municipalities: An integrated view of efficiency and access," Socio-Economic Planning Sciences, Elsevier, vol. 79(C).

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