Investigating the Return of Scale Indicators, Technological Changes and Growth of Production Factors on the Cost in Shazand City Water and Wastewater Company

Subject Areas : Computational economics

Majid Karkhaneh ¹ , Ahmad Sarlak ² , Kambiz Hozhbar Kiani ³

1 - Ph.D. student in economics, Arak Branch, Islamic Azad University, Arak, Iran
2 - Assistant Professor of Economics, Department of economics, Arak Branch, Islamic Azad University,Arak, Iran,
3 - Professor of Economics, Shahid Beheshti University, Department of economics and Political Science,Tehran, Iran,

Received: 2022-07-05 Accepted : 2022-07-05 Published : 2022-05-22

Keywords: Translog Cost Function, Seemingly Unrelated Regression, Productivity Growth, Return of Scale,

Abstract :

The main purpose of this article is to investigate the return of scale indicators,technological changes and productivity growth rate on the cost in Shazand CityWater and Wastewater Company. For this purpose, based on repetitive seeminglyunrelated Regression, translog cost function form was used to estimate water supplycost function. Cost function parameters were estimated from seasonal time seriesdata over time period 2008 to 2018. The company used four factors of production,labor, capital, raw materials and other services in the production process. The resultsshowed that there is a diminishing return to scale and a lack of economies of scale,which means that there is no natural monopoly in the company. Technologyprogress and productivity growth indicator indicates that cost reduction as a result oftechnology progress and productivity growth over the study period.