returns to scale

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returns to scale

the relationship between OUTPUT of a product and the quantities of FACTOR INPUTS used to produce it in the LONG RUN. Where, for example, doubling the quantity of factor inputs used results in a doubling of output then constant returns to scale’ are experienced. Where ECONOMIES OF SCALE are present, a doubling of factor inputs results in a more than proportionate increase in output. By contrast, where DISECONOMIES OF SCALE are encountered, a doubling of factor inputs results in a less than proportionate increase in output.
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Decreasing or constant returns to scale cause no inefficiency because there is simply no profitable arbitrage opportunity under these circumstances.
The fact that, especially, the Barro and Sala-i-Martin studies find evidence that is compatible with the assumption of constant returns to scale is somewhat surprising, because it is almost an article of faith of regional economists that production is characterised by substantial internal and external (agglomeration) economies of scale (Krugman, 1992).
PROOF: By constant returns to scale and [1], we have [Mathematical Expression Omitted].
There are nearly constant returns to scale in outpatient care for system members, and increasing returns to scale for independent hospitals.
If constant returns to scale are assumed, then a doubling of inputs results in the doubling of number of baccalaureate degrees conferred.
As suggested earlier, theory suggests that firms should operate on a production function at constant returns to scale (Hall et al.
The residual TFP method assumes essentially constant returns to scale and Hicks neutral technical change.
On the other hand, the total return to investment exhibits decreasing or constant returns to scale, so |y.
In particular, the CCR model assumes constant returns to scale, while the additive model allows for the possibility of constant (C), increasing (I) or decreasing (D) returns.
In spite of this, the true model used to generate the date is the simple constant returns to scale model (1).
We have applied DEA under two possible returns to scale assumptions: (i) Constant returns to scale, and (ii) Variable returns to scale.
DEA, a linear programming technique, was originally developed by Charnes, Cooper, and Rhoades (1978) with Constant Returns to Scale (CRS) extended by Banker et al.

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