Multi-Product Cost Attributes: A Study of U.K. Building Societies

A translog multi-product cost function is estimated jointly with a derived input cost share equation to obtain estimates of overall economies of scale and ‘augmented’ overall economies of scale for the United Kingdom building society industry. The ‘augmented’ measure takes into account induced changes in the number of building society branch offices as the outputs vary. The parameter estimates are then used to compute the derivatives of the marginal costs of each product to test for product-specific economies of scale and economies of scope.