Template-Type:ReDIF-Paper 1.0
Title: Modelling Economies of Scope
Author-Name: Nehring, Klaus und Clemens Puppe
Author-Postal: Prof. Clemens Puppe
	Universitaet Bonn
	Wirtschaftstheorie III
	Adenauerallee 24-42
	53113 Bonn
Author-Phone: 0228 73 5747
Author-Homepage: 
Classification-JEL: L11,D20
Keywords: Economies of scope, cost function, public inputs, similarity, conjugate Moebius inverse
Abstract: Economies of scope arise from synergies in the production of similar goods. The classical
	notion of joint production explains instances of such synergies by the fact that some factors
	of production are pure public inputs. We argue that this explanation applies much more
	generally than is usually assumed in the literature. Specifically, we show that the
	applicability of the joint public input explanation is essentially characterized by the
	property that synergies are decreasing as the scope of production increases; we also argue that
	the latter property of "substitutive" synergies represents the normal case. Secondly, we
	formalize a notion of comparative similarity of goods both in terms of the structure of inputs
	and in terms of the cost function itself. This leads to a structured repertoire of models of
	economies of scope, among which we determine a privileged subclass that combines flexibility
	with reduction of complexity and interpretability.
Length:   pages
Creation-Date: 1999-12
Revision-Date: 
Handle: RePEc:bon:bonsfa:607