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- Title
A Reexamination of Returns to Scale, Density and Technical Progress in U.S. Airlines.
- Authors
Kumbhakar, Subal C.
- Abstract
The objective of this paper is to estimate a model of airline costs along the lines of Caves, Christensen, and Tretheway [5]. However, we extend their results in several ways. First, we consider a modest generalization of the Symmetric Generalized McFadden (SGM) cost function developed by Diewert and Wales by including network and control variables in the airline cost function. The SGM cost function is flexible and globally concave in input prices. Thus our estimates of parameters and measures of RTS, RTD, and technical progress are based on a cost function which is globally concave. Second, we estimate the system of input demand functions instead of the cost function and, while estimating these input demand functions derived from the cost minimizing behavior of the airlines, we incorporate firm- and input-specific effects. These effects capture possible differences in production technologies among airlines.
- Publication
Southern Economic Journal, 1990, Vol 57, Issue 2, p428
- ISSN
0038-4038
- Publication type
Academic Journal
- DOI
10.2307/1060621