scholarly journals An Analysis of the Cost Structure of Food Industries in Pakistan: An Application of the Translog Cost Function

2020 ◽  
Vol 25 (2) ◽  
pp. 1-22
Author(s):  
Sajid Hussain ◽  
Uzma Nisar ◽  
Waseem Akram
Keyword(s):  
Cost Function ◽  
Price Elasticity ◽  
Economies Of Scale ◽  
Elasticity Of Substitution ◽  
Translog Cost Function ◽  
Food Industries ◽  
Output Elasticity ◽  
Cross Price Elasticity ◽  
The Cost ◽  
Factor Inputs

Given the importance of food industriesin Pakistan, this studyanalyzestheircost structure by estimating thetranscendental logarithmic cost function. The study also considers elasticity of substitution along with own-price elasticity and cross-price elasticity. Four factor inputs,i.e.,labor, capital, energy,and materials,are used toestimatethe cost function. The results indicate that materialsaccount for the highest share of the cost. The elasticity of substitution of materialsfor capital and energy is also weak. The own-price elasticities indicate that the demand for materialsis least responsive to a change in its own price while the demand for other inputs varies with price. The cross-priceelasticities show that labor, capital and energy are substitutes foreach other. The output elasticity of cost demonstrates the presence of economies of scale.

scholarly journals ECONOMICAL BEHAVIOR ANALYSIS OF AGRICULTURAL COMPANIES IN IRAQ USING TRANSLOG COST FUNCTION

2019 ◽  
Vol 50 (Special) ◽  
Author(s):  
AJ-Jiboory & Ali
Keyword(s):  
Cost Function ◽  
The Self ◽  
Elasticity Of Substitution ◽  
Partial Substitution ◽  
Translog Cost Function ◽  
Total Cost ◽  
Use Of Resources ◽  
Production Quantity ◽  
Translog Cost ◽  
Low Rate

This research aims to identify the productive relationship nature among the elements used in the agricultural companies by estimating the translog cost function. It also aims to recognize the possibility of substituting these elements with each other, to identify the nature of revenues, and economies scale through elasticity of other cost. This research goes further to define the typical use of resources, identify the performance of the companies and their contribution in controlling their cost, and estimating elasticity of substitution (Allen-Uzawa), (Morishima).  The translog cost function was estimated so as the total cost of the agricultural companies is a function of the prices of production and production quantity output  elements. The shares of production elements  (labor, capital, commodity and services requisites)  were derived from this translog  cost function by using SUR method and Eviews9 after applying  symmetry and homogeneity.  It was clear, in the translog cost function or in the production elements share functions,  that there is a strong correlation between the prices of the production elements and the total costs.  If prices increase, their contribution share in the total costs increases. Calculation were made among production elements, the self demand, cross, and substitution elasticity. Results show that the self demand was  ( 0.64،2.01 ، 0.02،2.28). This result clarifies the share of the production elements (labor, capital, commodity and services requisites)  in the total costs of the agricultural companies. The results show that increasing in the wage of labor, capital prices, and commodity and services requisites with 1% had led to increase in the demand on labor, capital prices, and commodity and services requisites   with ( 0.64%, 2.10%, 0.02%, and 2.28% ) respectively. The elasticity (Allen – Uzawa) of partial substitution between the labor and capital was 0.0009. This indicates that increasing the capital price value to the labor wage with rate of 1% will decrease the capital element rate to the labor wage with 0.0009%. This is a very low rate. The elasticity of partial substitution (Morishima) for the elements of production shares was (2.1, 0.02, 2.27, and 0.06).

scholarly journals Market Structure And Banking Production Economies: Evidence From The 1980s Deregulation

2011 ◽  
Vol 8 (3) ◽  
pp. 46
Author(s):  
Rasoul Rezvanian ◽  
Nanda Rangan ◽  
Richard Grabowski
Keyword(s):  
Average Cost ◽  
Economies Of Scale ◽  
Cost Structure ◽  
Economies Of Scope ◽  
Translog Cost Function ◽  
Production Economies ◽  
Cost Curves ◽  
Using Data ◽  
The Cost ◽  
Over Time

This study examines the changes in the cost structure of banking firms using data from pre and post deregulation periods. A translog cost function is utilized for the analyses of economies of scale and scope. The results indicate that the average cost curves, although U-shaped flattened over time, resulting in an increase in optimal bank size. Economies of scope that existed prior to deregulation appears to be exhausted in a more nonconstrained environment.

scholarly journals Economies of Scale in the Floriculture Industry

2003 ◽  
Vol 35 (3) ◽  
pp. 497-507 ◽  
Author(s):  
Sara K. Schumacher ◽  
Thomas L. Marsh
Keyword(s):  
United States ◽  
Cost Function ◽  
Economies Of Scale ◽  
The United States ◽  
Cost Structure ◽  
Cost Advantage ◽  
Quadratic Cost ◽  
Cost Efficiencies ◽  
The Cost ◽  
Quadratic Cost Function

This study investigated the cost structure of the floriculture industry in the United States. Economies of scale and input elasticities were estimated with a normalized quadratic cost function. Results suggest that economies of scale exist in the floriculture industry. As producers become large and more automated, they have a cost advantage relative to smaller producers who are producing the same output product mix. The existence of economies of scale suggests that average grower size can increase in the future as growers increase in size to take advantage of cost efficiencies.

scholarly journals The Cost Function and Scale Economies in Academic Research Libraries

2002 ◽  
Vol 63 (5) ◽  
pp. 406-420 ◽  
Author(s):  
Lewis Guodo Liu
Keyword(s):  
Cost Function ◽  
Economies Of Scale ◽  
Academic Research ◽  
Scale Economies ◽  
Information Provision ◽  
Total Cost ◽  
Research Libraries ◽  
Wide Range ◽  
The Cost ◽  
Total Cost Function

This empirical research examined scale economies of academic research libraries that belong to the Association of Research Libraries and developed a total cost function for estimating economies of scale. The author argues that libraries in general, and academic research libraries in particular, are information provision organizations that provide multiproducts and multiservices and points out that some previous studies that used the production function have limitations due to the fact that this function only permits a single-output variable. This investigation incorporated a wide range of collections and service output variables into the total cost function. The regression results show that the R square of the cost function model is .8142 and that the coefficients of three very important output variables (volumes held, serials, and group presentations) are statistically significant at high confidence levels. The findings of this research show that the function coefficient is .93, indicating that slight economies of scale exist in academic research libraries.

scholarly journals The Cost of Scale Inefficiency In The Canadian Brewing Industry: A Multi-Product Cost Function Approach

2011 ◽  
Vol 7 (1) ◽  
pp. 16 ◽  
Author(s):  
Manolis D. Tsiritakis ◽  
Charles A. Campbell ◽  
Andreas G. Merikas
Keyword(s):  
Cost Function ◽  
Economies Of Scale ◽  
Function Approach ◽  
Micro Data ◽  
Brewing Industry ◽  
Product Cost ◽  
Current Configuration ◽  
Industry Regulation ◽  
Beer Industry ◽  
The Cost

The study examines economies of scale for the Canadian beer industry using multi-product cost functions using micro data. The results reflect the effects of product mix, industry regulation, and interprovincial trade prohibitions. With the present mix of products 10 plants could supply the needed quantity of beer at less expense than the current configuration of 25 plants. The cost of regulation is estimated to be approximately 6.5% above the optimal plant cost.

scholarly journals Evidence on Allocative Efficiency and Elasticities of Substitution in the Manufacturing Sector of Pakistan

2005 ◽  
Vol 44 (4II) ◽  
pp. 795-803
Author(s):  
Sohail Zafar ◽  
Eatzaz Ahmed
Keyword(s):  
Developing Countries ◽  
Cost Function ◽  
Manufacturing Sector ◽  
Allocative Efficiency ◽  
Cost Structure ◽  
Raw Material ◽  
Translog Cost Function ◽  
Effective Competition ◽  
Factor Markets ◽  
The Cost

Lack of effective competition in factor markets often produces allocative or price inefficiencies in the manufacturing sector of developing countries like Pakistan. Such inefficiencies are common due to distortion in factor markets leading to the use of inappropriate factor proportions Lau and Yotopoulos (1971, 1972), Yotopoulos and Lau (1973), Burki, et al. (1997), Khan (1998), Ahmed (1999), Zafar (2000). Pakistan is also one of the country where labour is abundant but capital and raw material are scarce. Our finding undermine estimates of elasticities of demand and substitution based on classical assumption that factor markets are perfectly competitive i.e. Kazi, et al. (1976), Kemal (1981), Battese and Malik (1987, 1988, 1993), Malik, et al. (1989), Mahmood (1989, 1992), Zahid, et al. (1992) and Khan and Rafiq (1993). In order to discuss the cost structure of the manufacturing sector we will estimate well behaved translog cost function.

Are Online and Offline Advertising Substitutes or Complements? Evidence from U.S. Food Industries

2017 ◽  
Vol 15 (2) ◽  
Author(s):  
Xi He ◽  
Rigoberto Lopez ◽  
Yizao Liu
Keyword(s):  
Print Media ◽  
Online Advertising ◽  
Translog Cost Function ◽  
Complementarity Effect ◽  
Print Advertisements ◽  
Food Industries ◽  
Carbonated Soft Drinks ◽  
Advertising Exposure ◽  
The Cost ◽  
The Impact

AbstractThis article investigates the substitution between online advertising (ONLA) and offline advertising (OFFLA) as well as the impact of adopting ONLA on the total cost of advertising. We estimate an advertising translog cost function at the product-brand level, using monthly observations between 2005 and 2011 for each of three industries: beer, ready-to-eat cereals, and carbonated soft drinks. Although in all three industries we find that traditional media (TV and print) advertisements are close substitutes, we also find that ONLA is a complement to, rather than a substitute for, both TV and print media advertising. This may be explained by ONLA’s targeting younger market segments and acting as a reinforcement of TV and print media advertising exposure. Further results show that the adoption of ONLA has lowered the cost of advertising for achieving a sales target and that its complementarity effect is weakening over time.

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