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Economies of scale and scope in Australian telecommunications

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Author Info
Bloch, Harry
Madden, Gary G
Savage, Scott J

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Abstract

This paper employs a composite cost function to examine the cost structure of Australian telephone services. The composite cost model combines the log-quadratic input price structure of the translog model with a quadratic structure for multiple outputs. Quadratic output structures permit the measurement of economies of scale, economies of scope, and subadditivity without prejudging their presence. Model estimates, on Telstra system data from 1926 to 1991, show that the production of Australian telephone services exhibits economies of scope but no ray economies of scale.

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File URL: http://mpra.ub.uni-muenchen.de/11154/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11154.

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Date of creation: 2001
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Handle: RePEc:pra:mprapa:11154

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Related research
Keywords: Telecommunications; production; scale; scope; Australia;

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Find related papers by JEL classification:
L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Baumol, William J, 1977. "On the Proper Cost Tests for Natural Monopoly in a Multiproduct Industry," American Economic Review, American Economic Association, vol. 67(5), pages 809-22, December. [Downloadable!] (restricted)
  2. Pulley, Lawrence B & Braunstein, Yale M, 1992. "A Composite Cost Function for Multiproduct Firms with an Application to Economies of Scope in Banking," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 221-30, May. [Downloadable!] (restricted)
  3. Berg, Sanford V & Tschirhart, John, 1995. "A Market Test for Natural Monopoly in Local Exchange," Journal of Regulatory Economics, Springer, vol. 8(2), pages 103-24, September.
  4. 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. [Downloadable!] (restricted)
  5. Roller, Lars-Hendrik, 1990. "Modelling Cost Structure: The Bell System Revisited," Applied Economics, Taylor and Francis Journals, vol. 22(12), pages 1661-74, December.
  6. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January. [Downloadable!] (restricted)
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  7. Evans, David S & Heckman, James J, 1984. "A Test for Subadditivity of the Cost Function with an Application to the Bell System," American Economic Review, American Economic Association, vol. 74(4), pages 615-23, September. [Downloadable!] (restricted)
  8. Baumol, William J & Braunstein, Yale M, 1977. "Empirical Study of Scale Economies and Production Complementarity: The Case of Journal Publication," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 1037-48, October. [Downloadable!] (restricted)
  9. 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. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gholamreza Hajargasht & Tim Coelli & D. S. Prasada Rao, 2006. "A Dual Measure of Economies of Scope," CEPA Working Papers Series WP032006, School of Economics, University of Queensland, Australia. [Downloadable!]
    Other versions:
  2. Russell Pittman, 2001. "Vertical Restructuring of the Infrastructure Sectors of Transition Economies," Industrial Organization 0111002, EconWPA. [Downloadable!]
  3. Ottoz Elisabetta & Di Giacomo Marina, 2008. "Diversification strategies and scope economies evidence from a sample of Italian bus transport providers," Department of Economics Working Papers 200802, University of Turin. [Downloadable!]
  4. Giovanni Fraquelli & Massimiliano Piacenza & Davide Vannoni, 2004. "Scope and scale economies in multi-utilities: evidence from gas, water and electricity combinations," Applied Economics, Taylor and Francis Journals, vol. 36(18), pages 2045-2057, October. [Downloadable!] (restricted)
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