publication . Preprint . 2003

Scale and Scope Economies in the Global Advertising and Marketing Services Business

Alvin J. Silk; Ernst R. Berndt;
Open Access
  • Published: 01 Sep 2003
We assess size and scope-related economies in the global advertising and marketing services business. A translog cost function is employed wherein a firm's costs vary according to its scale and two dimensions of the scope of its operations. Parameters of the model are estimated via three stage least squares using annual data for 1989-2001 for an unbalanced panel consisting of the eight largest firms in this industry. A firm's total variable costs are affected by its scale, scope (mix of services and markets served), and by the interaction of the two dimensions of scope. The latter effect suggests that economies of coordination may accompany the strategy of joint...
free text keywords: jel:L1, jel:L2
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