• Title/Summary/Keyword: Cobb-Douglas Production Function

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The Effects of Production Factors on Commercial Production of Etawah Crossbred Goats in Boyolali, Central Java, Indonesia

  • Suryanto, B.;Prasetiyono, B.W.H.E.;Kurnianto, E.
    • Asian-Australasian Journal of Animal Sciences
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    • v.15 no.9
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    • pp.1263-1266
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    • 2002
  • The objective of this study was to evaluate the effects of some production factors on commercial production of Etawah Crossbred Goats (ECG) of Inpres Desa Tertinggal member groups (AKIDT) at Krasak, Pandansari, Brajan, and Kragilan villages in Boyolali regency, Central Java, Indonesia. The study was from February to April 2000. Eighty respondents of AKIDT were selected by simple random sampling and the data were analyzed using Cobb Douglas Production Function. The results showed that ECG production simultaneously were highly significant (p<0.01) influenced by amount of feed consumed (kg TDN/year, $x_1$), number of does of ECG (Animal Unit/year, $x_2$), number of kids and does/ barn/year (Animal Unit/year, $x_3$), labor use (man-days/year, $x_4$) and work capital (US$/year, $x_5$) with $R^2= 0.6568$. In addition, ECG production was partially influenced by $x_2$, $x_3$ and $x_5$ (p<0.01) and $x_1$ (p<0.05), but not significant (p>0.05) by $x_4$. Technically, production factors of $x_1$, $x_2$, $x_3$, $x_4$, $x_5$ had reached technique efficiency (0$x_1$, $x_3$, $x_4$, $x_5$ did not showed efficiency (Ep<1) and $x_2$ was not efficient yet.

A Study on the Optimal Production Using Discrete Time Bio-economic Model: A Case of the Large Purse Seine Fisheries in Korea (바이오경제모형을 이용한 최적 생산량 분석: 수산업을 중심으로)

  • Nam, Jong Oh;Choi, Jong Du;Cho, Jung Hee;Lee, Jung Sam
    • Environmental and Resource Economics Review
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    • v.19 no.4
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    • pp.771-804
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    • 2010
  • This paper estimates optimal production of fish stock using discrete time bio-economic model to make zero profits or to maximize economic profits with maintaining sustainable resource levels under an open access and a sole owner. Particularly, this study generates optimal yields and efforts of large purse seine fisheries which catch mackerel and jack mackerel by using the logistic growth function, Cobb-Douglas production function, fisheries cost and profit functions. As a result, optimal yields of mackerel and jack mackerel under ecological equilibrium of a sole owner were approximately 172,512 tons and 16,937 tons respectively. Also, optimal fishing efforts of mackerel and jack mackerel under the same situation were about 8,508 hauls and 4,915 hauls respectively. In conclusion, the paper suggests that the large purse seine should reduce fishing efforts and increase fish stock to generate higher net present value in optimally managed fishery than that of the present large purse seine.

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Economies of Scale and Scope in the Korean Railway Industry: A Generalized Translog Cost Function Approach (일반초월대수 비용함수모형을 이용한 한국 철도산업의 규모 및 범위의 경제성 분석)

  • Park, Jin-Kyung;Kim, Sung-Soo
    • Journal of Korean Society of Transportation
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    • v.22 no.6
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    • pp.159-173
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    • 2004
  • Using a generalized translog multiproduct cost function model, this paper examines economies of scale and scope in the vertically-integrated Korean railway industry. The paper then conceptualizes that the Korea National Railroad (KNR) produces four outputs (passenger-kilometers, ton-kilometers of freight, average length of passenger trips, and average length of freight haul) using three input factors(labor, fuel and maintenance, and rolling stock and capital). Using time series data collected from the KNR's annual records for the years from 1977 to 2002, the simultaneous equation system consisting of a cost function and two input share equatins is estimated with the Zellner's iterative seemingly unrelated regression. The findings show that the cost function corresponding to a non-Cobb-Douglas, non-homothetic, and non-homogeneous production technology adequately represents the KNR's cost structure. On the other hand, the Korean railway industry experiences sizeable overall scale economies, which result from substantial product-specific scale economies associated with passenger-kilometers and freight ton-kilometers and from scope economies associated with their joint production. In addition, the magnitude of economies of scope is influenced largely by the ratio of passenger trips, and has increased over time as the former has increased while the latter has decreased.

Value of Information Technology Outsourcing: An Empirical Analysis of Korean Industries (IT 아웃소싱의 가치에 관한 연구: 한국 산업에 대한 실증분석)

  • Han, Kun-Soo;Lee, Kang-Bae
    • Asia pacific journal of information systems
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    • v.20 no.3
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    • pp.115-137
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    • 2010
  • Information technology (IT) outsourcing, the use of a third-party vendor to provide IT services, started in the late 1980s and early 1990s in Korea, and has increased rapidly since 2000. Recently, firms have increased their efforts to capture greater value from IT outsourcing. To date, there have been a large number of studies on IT outsourcing. Most prior studies on IT outsourcing have focused on outsourcing practices and decisions, and little attention has been paid to objectively measuring the value of IT outsourcing. In addition, studies that examined the performance of IT outsourcing have mainly relied on anecdotal evidence or practitioners' perceptions. Our study examines the contribution of IT outsourcing to economic growth in Korean industries over the 1990 to 2007 period, using a production function framework and a panel data set for 54 industries constructed from input-output tables, fixed-capital formation tables, and employment tables. Based on the framework and estimation procedures that Han, Kauffman and Nault (2010) used to examine the economic impact of IT outsourcing in U.S. industries, we evaluate the impact of IT outsourcing on output and productivity in Korean industries. Because IT outsourcing started to grow at a significantly more rapid pace in 2000, we compare the impact of IT outsourcing in pre- and post-2000 periods. Our industry-level panel data cover a large proportion of Korean economy-54 out of 58 Korean industries. This allows us greater opportunity to assess the impacts of IT outsourcing on objective performance measures, such as output and productivity. Using IT outsourcing and IT capital as our primary independent variables, we employ an extended Cobb-Douglas production function in which both variables are treated as factor inputs. We also derive and estimate a labor productivity equation to assess the impact of our IT variables on labor productivity. We use data from seven years (1990, 1993, 2000, 2003, 2005, 2006, and 2007) for which both input-output tables and fixed-capital formation tables are available. Combining the input-output tables and fixed-capital formation tables resulted in 54 industries. IT outsourcing is measured as the value of computer-related services purchased by each industry in a given year. All the variables have been converted to 2000 Korean Won using GDP deflators. To calculate labor hours, we use the average work hours for each sector provided by the OECD. To effectively control for heteroskedasticity and autocorrelation present in our dataset, we use the feasible generalized least squares (FGLS) procedures. Because the AR1 process may be industry-specific (i.e., panel-specific), we consider both common AR1 and panel-specific AR1 (PSAR1) processes in our estimations. We also include year dummies to control for year-specific effects common across industries, and sector dummies (as defined in the GDP deflator) to control for time-invariant sector-specific effects. Based on the full sample of 378 observations, we find that a 1% increase in IT outsourcing is associated with a 0.012~0.014% increase in gross output and a 1% increase in IT capital is associated with a 0.024~0.027% increase in gross output. To compare the contribution of IT outsourcing relative to that of IT capital, we examined gross marginal product (GMP). The average GMP of IT outsourcing was 6.423, which is substantially greater than that of IT capital at 2.093. This indicates that on average if an industry invests KRW 1 millon, it can increase its output by KRW 6.4 million. In terms of the contribution to labor productivity, we find that a 1% increase in IT outsourcing is associated with a 0.009~0.01% increase in labor productivity while a 1% increase in IT capital is associated with a 0.024~0.025% increase in labor productivity. Overall, our results indicate that IT outsourcing has made positive and economically meaningful contributions to output and productivity in Korean industries over the 1990 to 2007 period. The average GMP of IT outsourcing we report about Korean industries is 1.44 times greater than that in U.S. industries reported in Han et al. (2010). Further, we find that the contribution of IT outsourcing has been significantly greater in the 2000~2007 period during which the growth of IT outsourcing accelerated. Our study provides implication for policymakers and managers. First, our results suggest that Korean industries can capture further benefits by increasing investments in IT outsourcing. Second, our analyses and results provide a basis for managers to assess the impact of investments in IT outsourcing and IT capital in an objective and quantitative manner. Building on our study, future research should examine the impact of IT outsourcing at a more detailed industry level and the firm level.

A Brief Efficiency Measurement Way for the Korean Container Terminals Using Stochastic Frontier Analysis (확률프론티어분석을 통한 국내컨테이너 터미널의 효율성 측정방법 소고)

  • Park, Ro-Kyung
    • Journal of Korea Port Economic Association
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    • v.26 no.4
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    • pp.63-87
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    • 2010
  • The purpose of this paper is to measure the efficiency of Korean container terminals by using SFA(Stochastic Frontier Analysis). Inputs[Number of Employee, Quay Length, Container Terminal Area, Number of Gantry Crane], and output[TEU] are used for 3 years(2002,2003, and 2004) for 8 Korean container terminals by applying both SFA and DEA models. Empirical main results are as follows: First, Null hypothesis that technical inefficiency is not existed is rejected and in the trasnslog model, the estimate is significant. Second, time-series models show the significant results. Third, average technical efficiency of Korean container terminals are 73.49% in Cobb-Douglas model, and 79.04% in translog model. Fourth, to enhance the technical efficiency, Korean container terminals should increase the handling amount of TEUs. Fifth, both SFA and DEA models have the high Spearman ranking of correlation coefficients(84.45%). The main policy implication based on the findings of this study is that the manager of port investment and management of Ministry of Land, Transport and Maritime Affairs in Korea should introduce the SFA with DEA models for measuring the efficiency of Korean ports and terminals.