Scale economies are commonplace in operations, yet, due to analytical challenges, relatively little is known about how ...rms should compete in their presence. This paper presents a model of competition between two ...rms that face scale economies; i.e., each ...rm’s cost per unit of demand is decreasing in demand. A general framework is used, which incorporates competition between two service ...

This letter will take an example from the Japanese local telecommunications industry in the 1990s and analyze the cost structures of a basic service and an advanced service, focusing on the economies of scale and scope. Here, the basic service is defined as the plain old telephone service (POTS) while the advanced service the leased circuit service. There are three points we will make: first, t...

We provide an extensive and general investigation of the effects on industry performance (profits and social welfare) of exogenously changing the number of firms in a Cournot framework. This amounts to an in-depth exploration of the well-known trade-off between competition and production efficiency. We establish that under scale economies, welfare is maximized by a finite number of firms. Our r...

Context and aim: The Danish hospital sector is facing a significant rebuilding programme, driven by a political desire to concentrate activity in fewer and larger hospitals. Our aim is to analyse whether the current configuration of Danish hospitals is subject to scale economies that may justify such plans and to estimate an optimal hospital size. Methods: We estimate cost functions using panel...

Strategic positioning and potential cost savings are popular explanations for growing consolidation in the wireless telephone industry. This research estimates economies of scale for a large panel of GTE Wireless cellular market areas. Contrary to previous findings, our results indicate scale economies exist throughout the system and provide a rationale for the industry trend of consolidation.

We provide an extensive and general investigation of the e¤ects on industry performance – pro…ts, social welfare and price-cost margins –of exogenously changing the number of …rms in Cournot markets. This includes an in-depth exploration of the well-known trade-o¤ between competition and production e¢ ciency. Most conventional beliefs actually require some quali…cations to be valid. Under scale...

Economics depends on the economic scale of planning. Economists study the characteristics of the production function, while community operating management focuses on demand realization, so that loss of sales or inventory prevents cost reductions and maximizes profits. However, companies with a lack of capacity need to achieve economies of scale and demand to realize them simultaneously, especia...

This is the first paper that examines economies of scale in stock exchanges. The data employed in the study include cost and output statistics for 37 stock exchanges in four continents around the world for the year 1997. I estimate two traditional cost functions and find that ray (overall) scale economies exist only in the very large stock exchanges but that there are significant scale economie...