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- Title
ADDITION AND EFFICIENCY.
- Authors
Färe, Rolf
- Abstract
This article introduces a nonparametric approach to estimate or test economies of scope. The thought that it can be efficient to combine two or more multiproduct firms is made precise by Baumol, Panzar, and Willig. In particular, the notion of economies of scope is introduced to model the gains of combining two or more firms producing different outputs. One economic importance of economies of scope in the proposition of Baumol, Panzar, and Willig stated that multiproduct firms in a competitive equilibrium must enjoy economies of scope over the set of products which they produce; that is economies of scope are necessary for the existence of multiproduct competitive firms.
- Subjects
MULTIPRODUCT firms; ECONOMIES of scope; NONPARAMETRIC statistics; INDUSTRIAL efficiency; INDUSTRIAL productivity; BUSINESS enterprises
- Publication
Quarterly Journal of Economics, 1986, Vol 101, Issue 4, p861
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1884181