On the Determinants of Cost Performance and the Decomposition of Returns to Scale Measures in the Presence of Quasi-fixed Inputs. a Comment on Morrison and Schwartz (1996) and Related Work

In this note I amend and clarify the framework for cost analysis developed and applied by Morrison and Schwartz (M&S) in a series of papers. I propose a consistent decomposition of a cost-based measure of short-run returns to scale and develop a version of M&S's dynamic decomposition that makes transparent its nature and usefulness as a cost-accounting device. _________________________________________ * I would like to thank Xavier Vives for his useful comments and suggestions. This research has been financed in part by the Spanish Ministry of Education and Culture through DGICYT grants no. PB95-0130 and SEC99-1189 Address Instituto de Análisis Económico (CSIC), Campus de la Universidad Autónoma de Barcelona, 08193, Bellaterra, Barcelona, Spain.Tel: 93-580-6612. Fax: 93-580-1452. E-Mail address: [email protected]. es.