An analysis of returns to scale in public production, with an application to fire protection
William David Duncombe, John Ýinger
Abstract
Open-access reader
William David Duncombe, John Ýinger
Abstract
Open-access reader
This paper analyzes returns to scale in public production. Existing studies fail to differentiate among three dimensions of scale: service quality, the level of governmental activity, and the number of people served. A fourth dimension, economies of scope, is need for agencies that provide multiple services. This paper provides a formal definition of returns to scale for each dimension. This framework is applied to fire protection, using a translog cost function with two services, fire prevention and fire suppression. The results indicate economies of scope, increasing returns to quality scale, and constant returns to population scale.
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This paper analyzes returns to scale in public production. Existing studies fail to differentiate among three dimensions of scale: service quality, the level of governmental activity, and the number of people served. A fourth dimension, economies of scope, is need for agencies that provide multiple services. This paper provides a formal definition of returns to scale for each dimension. This framework is applied to fire protection, using a translog cost function with two services, fire prevention and fire suppression. The results indicate economies of scope, increasing returns to quality scale, and constant returns to population scale.
Key concepts: Returns to scale, Scope (computer science), Production (economics), Scale (ratio), Dimension (graph theory), Economics, Economies of scale, Quality (philosophy)