Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73772
Authors: 
Triebs, Thomas
Saal, David S.
Arocena, Pablo
Kumbhakar, Subal C.
Year of Publication: 
2012
Series/Report no.: 
Ifo Working Paper 142
Abstract: 
Economies of scale and scope are typically modelled and estimated using cost functions that are common to all firms in an industry irrespective of whether they specialize in a single output or produce multiple outputs. We suggest an alternative flexible technology model that does not make this assumption and show how it can be estimated using standard parametric functions including the translog. The assumption of common technology is a special case of our model and is testable econometrically. Our application is for publicly owned US electric utilities. In our sample, we find evidence of economies of scale and vertical economies of scope. But the results do not support a common technology for integrated and specialized firms. In particular, our empirical results suggest that restricting the technology might result in biased estimates of economies ofscale and scope.
Subjects: 
Economies of scale and scope
flexible technology
electric utilities
vertical integration
translog cost function
JEL: 
D24
L25
L94
C51
Document Type: 
Working Paper

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