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...

where Ω is an open connected subset of R with a sufficiently smooth boundary, ρ and θ are sufficiently smooth scalar functions on Ω bounded below by a positive number, and u is a function on Ω that does not vanish uniformly. This eigenvalue PDE is the standard idealization of finding the vibrational modes of a thin plate clamped at the edges, in which the stiffness of the plate is given by θ, t...

We are most grateful for the comments made by Earl (2014) on our paper, Frey and Gallus (2014). In particular, we are pleased that we can fully agree on the fundamental point we wanted to make: decisions by individuals (as well as by organizational units) do not map directly and in an unchanged way to the macro level. Rather, the aggregation process linking the microand the macro-level must be ...

In 1937, Ronald Coase argued that firms will exist only in environments in which firms perform better than markets could. To create space for firms, Coase suggested that some environments might be plagued by “transaction costs” that cause markets to perform poorly. Coase’s paper was to become the cornerstone of the economic theory of the firm (i.e., the “make or buy” decision: which activities ...