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TECHNOLOGICAL DETERMINANTS OF FIRM AND INDUSTRY STRUCTURE
JOHN C. PANZAR Northwestern University
Contents
1. Introduction 4
2. The multiproduct cost function 4
2.1. Economies of scale 7
2.2. Product specific economies of scale 11
2.3. Economies of scope 15
2.4. Cost subadditivity and natural monopoly 23
3. Industry configurations 33
3.1. Feasible and eflicient single product industry configurations 35
3.2. Efficient multiproduct industry configurations 38
4. Empirical issues 41
4.1. Aggregation and the hedonic approach 42
4.2. Long-run and short-run measures of returns to scale 45
4.3. Empirical studies of electric power 46
4.4. Empirical studies of telecommunications 51
5. Concluding remarks 56
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