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Inferring scope economies from the input distance function

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  • Färe, Rolf
  • Karagiannis, Giannis

Abstract

We show that a necessary and sufficient condition for scope economies is that the technical efficiency of the joint production process to be less than or equal to the weighted sum of the technical efficiencies of the individual activities.

Suggested Citation

  • Färe, Rolf & Karagiannis, Giannis, 2018. "Inferring scope economies from the input distance function," Economics Letters, Elsevier, vol. 172(C), pages 40-42.
    • Handle: RePEc:eee:ecolet:v:172:y:2018:i:c:p:40-42
    DOI: 10.1016/j.econlet.2018.07.037
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    References listed on IDEAS

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    1. Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2008. "Economies of Scale and Scope in Multi-Utilities," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 123-144.
    2. Jiro Nemoto & Noriko Furumatsu, 2014. "Scale and scope economies of Japanese private universities revisited with an input distance function approach," Journal of Productivity Analysis, Springer, vol. 41(2), pages 213-226, April.
    3. Hajargasht, Gholamreza & Coelli, Tim & Rao, D.S. Prasada, 2008. "A dual measure of economies of scope," Economics Letters, Elsevier, vol. 100(2), pages 185-188, August.
    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 & Francis Journals, vol. 36(18), pages 2045-2057.
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    More about this item

    Keywords

    Scope economies; Input distance function; Efficiency;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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