On The Choice Of Functional Forms In The Measurement Of Scale And Scope Economies: Generalized Box-Cox And Composite Cost Functions
This paper estimates and compares generalized Box-Cox and composite cost functions to identify scale and scope economies. The robustness of the outcomes to different functional specifications was examined. Increasing returns to scale was common for product-specific and the overall measures. Generalized Leontief and composite forms yielded more robust elasticity, scale and scope measures. The generalized Box-Cox model was selected as the appropriate functional form as all the special cases were rejected.
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- Pulley, Lawrence B & Humphrey, David B, 1993. "The Role of Fixed Costs and Cost Complementarities in Determining Scope Economies and the Cost of Narrow Banking Proposals," The Journal of Business, University of Chicago Press, vol. 66(3), pages 437-462, July.
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- James A. Chalfant, 1984. "Comparison of Alternative Functional Forms with Application to Agricultural Input Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(2), pages 216-220.
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