External Effects and Cost of Production

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. Terms of use: Documents in Abstract:This paper addresses the role of external effects in the process of production. We define two types of external effects: those derived from inputs external to the firm but which affect its production, and those derived from externalities that cross the barriers of a given economy. Using a production function that explicitly considers the presence of both types of external effects, we derive a cost function by application of the duality theory. This cost function includes the external effects and at the same time it takes into consideration the different relationships between inputs. Two types of externalities across economies are then addressed: those arising from interactions across regions and those due to linkages across industries. We propose the application of spatial econometric techniques to test for the presence of such spillovers. For regional externalities, we focus on the physical interaction between regions, while sectoral interdependencies are obtained through the use of input-output relationships. Some specific characteristics of the resulting empirical model (cross-section and time-series dimension of the data and nonlinearity in some of the parameters) are discussed from a spatial viewpoint. We apply this framework to the case of manufacturing industries in the Spanish regional economies from 1980 to 1991. 1 "The Whole is more than the sum of the parts, in that, not only does the interrelation of parts bring out latent characteristics in each, as in any complex, but the complex as a whole takes on a new character not explainable out of the parts" (Hartshorne, 1939).

Economic Benefits of Investments in Transport Infrastructure

“…Namely, many studies calculate G for a particular locality as the weighted average of other localities' infrastructure, and G enters as a separate shift factor in the analysis. One exception is Moreno et. al.…”

“…Also, the focus of most previous spatial cost function studies is on the impacts of various types of infrastructure on the U.S. manufacturing sector. Another recent study by Moreno et. al.…”

Transport Infrastructure Investment and Interindustry Spillovers: The Effects on the Cost Structure of Australian Industries

“…This has perhaps been the limiting factor which explains the dearth of research in this area to date. While there are a few studies which address the spatial spillovers of transport within developed countries (e.g., Boarnet 1998, and Cohen and Morrison Paul 2003 in the U.S.; Moreno et al 2004, andEzcurra et al 2005 in Spain), the industry spillovers associated with transport were notably ignored. Surveying the literature, the singular exception is found in Moreno, López-Bazo, Vaya and Artis (2004) who examined both spatial and industrial spillovers for manufacturers in the Spanish regions, but focused on aggregate public capital.…”

“…While there are a few studies which address the spatial spillovers of transport within developed countries (e.g., Boarnet 1998, and Cohen and Morrison Paul 2003 in the U.S.; Moreno et al 2004, andEzcurra et al 2005 in Spain), the industry spillovers associated with transport were notably ignored. Surveying the literature, the singular exception is found in Moreno, López-Bazo, Vaya and Artis (2004) who examined both spatial and industrial spillovers for manufacturers in the Spanish regions, but focused on aggregate public capital. Morrison Paul (2002), has discussed the spillovers which may stem from industry linkages from a theoretical perspective, and has proposed potential mechanisms to incorporate them into productivity and cost analyses in order to account for the bias they may introduce in the effects of explanatory variables.…”

Agglomeration, Productivity and Regional Growth: Production Theory Approaches

“…This type of externality involves external inputs rather than externalities or spillovers among firms (Moreno et al, 2004). That is, natural advantage involves an input associated with a particular location, such as local natural resources that become primary materials inputs.…”