Abstract:

In some production processes, multiple products can be produced by using multiple inputs. At the same time, various portions of the very same input can be used to produce multiple products. It is argued in the literature that this joint production of goods and services can give rise a cost advantage for the firm. The aim of this paper is to test the economies of scope that is considered as a sufficient condition for joint production in order to see whether there is such a cost advantage. With this aim, a translog cost function for 84 hospitals governed by Ministry of Health, the Republic of Turkey is estimated. The dependent variable, the total variable cost, is defined as the total expenditure on labour, drugs-supplies. Hospital outputs are represented by the number of outpatient visits of discharged and of total patient days. The study uses personnel, drugs-supplies as variable inputs. Calculation carried out the output pairs reveals that economies of scope are present for outpatient visits and discharges. Hospitals do not seem to gain efficiencies from the joint production of outpatient visits an inpatient days.

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