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Scope Economies (scope + economy)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	80%

Selected Abstracts

The impact of privatization and regulation on the water and sewerage industry in England and Wales: a translog cost function model

MANAGERIAL AND DECISION ECONOMICS, Issue 6 2000
David S Saal
After the ten Regional Water Authorities (RWAs) of England and Wales were privatized in November 1989, the successor Water and Sewerage Companies (WASCs) faced a new regulatory regime that was designed to promote economic efficiency while simultaneously improving drinking water and environmental quality. As legally mandated quality improvements necessitated a costly capital investment programme, the industry's economic regulator, the Office of Water Services (Ofwat), implemented a retail price index (RPI)+K pricing system, which was designed to compensate the WASCs for their capital investment programme while also encouraging gains in economic efficiency. In order to analyse jointly the impact of privatization, as well as the impact of increasingly stringent economic and environmental regulation on the WASCs' economic performance, this paper estimates a translog multiple output cost function model for the period 1985,1999. Given the significant costs associated with water quality improvements, the model is augmented to include the impact of drinking water quality and environmental quality on total costs. The model is then employed to determine the extent of scale and scope economies in the water and sewerage industry, as well as the impact of privatization and economic regulation on economic efficiency. Copyright © 2000 John Wiley & Sons, Ltd. [source]

COMPETITIVE ISSUES IN THE TAIWANESE BANKING INDUSTRY: MERGERS AND UNIVERSAL BANKS

THE DEVELOPING ECONOMIES, Issue 3 2003
Peiyi YU
This paper investigates scale economies and scope economies in the Taiwanese banking system, looking beyond the market-power (MP) and efficient-structure (ES) hypotheses. Given the existence of overall economies of scale and the positive value of expansion path sub-additivity, we conclude that there might be large increases in profits following mergers. Moreover, since the profit-structure relationship after financial reform is determined by the relative-market-power hypothesis, this consolidation trend will not necessarily decrease the social benefit for Taiwanese consumers. With regard to scope economies and product-specific economies of scale, we are unable to recommend whether Taiwanese banks should develop as specialized banks or diversified banks in the future. Finally, we find that risk indicators play an important role in explaining the observed variation in bank profitability, and present evidence that default risk and leverage risk have negative effects on the profits of banking, although the effect of portfolio risk is uncertain. [source]

VERTICAL AND HORIZONTAL ECONOMIES IN THE ELECTRIC UTILITY INDUSTRY: AN INTEGRATED APPROACH

ANNALS OF PUBLIC AND COOPERATIVE ECONOMICS, Issue 3 2009
Massimiliano Piacenza
ABSTRACT,:,The empirical literature on the cost structure of the electric utility industry traditionally focused on the measurement of specific technological properties: 1) scale economies in generation or distribution; 2) multi-product (or horizontal) scope economies at one particular stage; 3) multi-stage (or vertical) scope economies. By adopting an integrated approach, which simultaneously considers both horizontal and vertical aspects of the technology, we find the presence, on a sample of Italian electric utilities, of both vertical integration gains and horizontal scope economies at the downstream stage. In the light of recent regulatory reforms aiming at restructuring European electricity markets, our findings have important policy implications as for the proper configuration of the industry. Moreover, this methodology can be usefully applied to the study of the production structure of other public network utilities involved in similar vertical and horizontal reorganization processes. [source]

Yardstick Cost Comparison and Economies of Scale and Scope in Japan's Electric Power Industry

ASIAN ECONOMIC JOURNAL, Issue 4 2004
Takanori Ida
This paper utilizes a fixed-effects model of panel data analysis and estimates the translog cost function of the Japanese electric power industry from 1978 to 1998. First, we investigate whether the Japanese electric power industry is naturally monopolistic. We find that all electric power companies still benefit from both scale and scope economies and therefore, this industry remains a naturally mono-polistic industry. Second, in order to apply the idea of yardstick-type competition to a naturally monopolistic industry where costs are quite different between companies, we introduce two kinds of cost-comparison coefficients, one for the individually specific effects and the other for scale and scope economies. [source]