Empirical literature on the cost structure of multiproduct firms traditionally assumes a common technology across different products and stages of production, letting the issue of poolability unexplored. The appropriateness of this assumption is tested by using data from UK specialized and diversified water utilities and by estimating a General cost function. The hypothesis of common technological parameters is rejected, suggesting caution in pooling samples when studying multiproduct firms.
The Appropriateness of the Poolability Assumption for Multiproduct Technologies
PIACENZA, Massimiliano;VANNONI, Davide
2007-01-01
Abstract
Empirical literature on the cost structure of multiproduct firms traditionally assumes a common technology across different products and stages of production, letting the issue of poolability unexplored. The appropriateness of this assumption is tested by using data from UK specialized and diversified water utilities and by estimating a General cost function. The hypothesis of common technological parameters is rejected, suggesting caution in pooling samples when studying multiproduct firms.
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