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Labour and capital saving technical change in telecommunications

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  • Madden, Gary G
  • Bloch, Harry
  • Coble-Neal, Grant

Abstract

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 this study the Australian telecommunications cost structure is examined for the period 1919 to 1988. To measure labour saving and capital saving technical change a translog cost model is estimated. Multiproduct telecommunications cost studies typically employ the translog cost model (Evans and Heckman, 1984; Roller, 1990a; 1990b; Shin and Ying, 1992; McKenzie and Small, 1997). The translog model places no a priori restrictions on substitution possibilities among the factors of production, and allows scale economies to vary with the level of output.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10683.

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Date of creation: 2002
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Handle: RePEc:pra:mprapa:10683

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  1. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, Econometric Society, vol. 55(1), pages 43-68, January.
  2. McKenzie, David J & Small, John P, 1997. "Econometric Cost Structure Estimates for Cellular Telephony in the United States," Journal of Regulatory Economics, Springer, Springer, vol. 12(2), pages 147-57, September.
  3. Roller, Lars-Hendrik, 1990. "Proper Quadratic Cost Functions with an Application to the Bell System," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 202-10, May.
  4. Richard T. Shin & John S. Ying, 1992. "Unnatural Monopolies in Local Telephone," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 171-183, Summer.
  5. Charles R. Hulten, 1992. "Growth Accounting When Technical Change is Embodied in Capital," NBER Working Papers 3971, National Bureau of Economic Research, Inc.
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Cited by:
  1. Rod Tyers & Lucy Rees, 2008. "Service Oligopolies And Australia'S Economy-Wide Performance," CAMA Working Papers 2008-05, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  2. Judy Shaw-Er & Wang Chiang & Ya-Wen Chen, 2005. "Cost structure and technological change of local public transport: the Kaohsiung City Bus case," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 37(12), pages 1399-1410.

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