Economies of Scale in the Tunisian Industries

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Forschungsinstitut zur Zukunft der ArbeitInstitute for the Study The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public.IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.IZA Discussion Paper No. 5737 May 2011 ABSTRACT Economies of Scale in the Tunisian IndustriesTo 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 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.JEL Classification: C32, C52, D24, F12, L00

Economies of Scale of Sugarcane Cooperatives in East Java Province and Their Influencing Factors

“…Second, in general, the cost function imposes fewer a priori assumptions on the substitution possibilities among the factors of production and it allows scale economies to vary with the level of output and allowing for size heterogeneity of scale economies. The TCF can also accommodate homothetic, homogeneous and unit elasticity of substitution forms within its general functional form structure (Haouas and Heshmati, 2013). Furthermore, the TCF can detect a U-shaped average cost curve if one exists in the data, which is the restrictive property of production function like the Cobb-Douglas (Brown and O'Connor, 1995).…”

“…Furthermore, the TCF can detect a U-shaped average cost curve if one exists in the data, which is the restrictive property of production function like the Cobb-Douglas (Brown and O'Connor, 1995). The TCF has been used in many studies on economies of scale in broad type of industries, such as in credit union (Brown and O'Connor, 1995), cooperative (Kebede and Schreiner, 1996;Liu and Bailey, 2012), banking (Deelchand and Padgett, 2009;Sahoo and Gstach, 2011;Fu and Sio, 2011), payment processing (Beijnen and Bolt, 2009), electricity (Tuthill, 2008), fifteen major sectors of the economy (Haouas and Heshmati, 2013), water utilities (Horn and Saito, 2011), airport (Martin and Voltes-Dorta, 2008), and tourism (Shi and Smyth, 2012) Following Liu and Bailey (2012), this study used producer approach in which cooperatives were treated as firms that provide services to consumers. With this approach, only labor and physical capital were considered as inputs necessary to conduct transactions (Margono et al, 2010;Deelchand and Padgett, 2009).…”