Premium
An examination of the equilibrium specification and structure of production for Canadian telecommunications
Author(s) -
Bernstein Jeffrey I.
Publication year - 1989
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.3950040305
Subject(s) - disequilibrium , production (economics) , economics , marginal cost , capital (architecture) , econometrics , order (exchange) , partial equilibrium , production model , marginal product , microeconomics , general equilibrium theory , finance , medicine , history , archaeology , ophthalmology
Multiple‐output models of Canadian telecommunications production are estimated under different production equilibria. A specification test is conducted between the short‐ and long‐run equilibrium models and the long‐run equilibrium is rejected. In order to capture the nature of the disequilibrium, a dynamic cost of adjustment model is estimated for Bell Canada. There are significant adjustment costs and it is estimated that for $1.00 of marginal capital costs the carrier must incur an additional cost of $0.30 to install the new capital into the production process.