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Title:Economies of scale in the Tunisian industries PDF Logo
Authors:Heshmati, Almas
Haouas, Ilham
Issue Date:2011
Series/Report no.:Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5737
Abstract:To date, empirical investigations of trade liberalization under the conditions of increasing returns to scale (IRS) and imperfect competition (IC) have either assumed or imposed the market and productive structures necessary for such a model. However, of the recent IRS/IC models used to simulate the effects of trade liberalization none have empirically tested for the presence of increasing return to scale prior to the analysis. With Tunisian data (1971-2004) and rigorous test procedures, we investigate evidence of IRS at the industry level. Using an econometric approach based on the estimation of the translog cost function and its associated cost share equations, we identify the sectors characterized by increasing returns to scale. Analysis of the results shows that specification of the model is sensitive to inclusion of time trend representing technology. The model accounting for technology did not fit the data well for most sectors. The estimation results without time trend interactions are different. Here most of the sectors show signs of increasing returns to scale.
Subjects:economies of scale
trade liberalization
new trade theory
Tunisian industries
cost functions
JEL:C32
C52
D24
F12
L00
Persistent Identifier of the first edition:urn:nbn:de:101:1-201106013832
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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