Testing the Multiproduct Hypothesis on Norwegian Aluminium Industry Plants

Arbeitspapier

Although most production activities involve multiple outputs, econometric models of production or cost functions normally involve only one single homogeneous output. The aim of this paper is to test the hypothesis that a multiproduct specification is superior to a model with a single homogenous product. To do this, we use a Multiproduct Symmetric Generalized McFadden (MSGM) cost function. This functional form is globally concave and flexible in the sense that it provides a second order differentiable approximation of any arbitrary cost function which is twice continuously differentiable and linear homogenous in input prices. In an empirical application on a panel data from ten Norwegian primary aluminium plants, we find support for our hypothesis. We present estimates of price elasticities, returns to scale and scope, and product specific demand elasticities. Our results indicate economies of scope, i.e. it is more profitable to produce more than one output, and show sensitivity of factor demand when the product mix changes.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Discussion Papers ; No. 350

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Firm Behavior: Theory ; Metals and Metal Products; Cement; Glass; Ceramics
• Thema: Cost function ; Multiple output ; Global concavity ; Returns to scale ; Economies of scope ; Price elasticity ; Output elasticity ; Panel data ; Primary aluminium industry

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Larsson, Jan
• Ereignis: Veröffentlichung
• (wer): Statistics Norway, Research Department
• (wo): Oslo
• (wann): 2003

Weitere Informationen

• Handle: http://hdl.handle.net/10419/192332
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ