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Nonparametric analysis of returns to scale in the US hospital industry

✍ Scribed by Paul W. Wilson; Kathleen Carey

Publisher
John Wiley and Sons
Year
2004
Tongue
English
Weight
410 KB
Volume
19
Category
Article
ISSN
0883-7252

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✦ Synopsis

Abstract

This paper presents new estimates of scale economies for US hospitals. We show that the common translog specification of hospital costs is a misspecification, and employ nonparametric, local linear estimation with both continuous and discrete covariates. A bootstrap method is used to provide inferences regarding ray scale economies and expansion path scale economies for a large sample of hospitals covering 1984–1996. We find evidence of changes in the structure of hospital costs over the sample period, as well as evidence of locally optimal hospital sizes. Copyright Β© 2004 John Wiley & Sons, Ltd.

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