Scale and Scope Economies of International Tourist Hotels in Taiwan

Abstract

Based on the survey data of Taiwan`s international tourist hotels in 2000, this paper applies Zellner`s seemingly unrelated regression technique to a simultaneous system of a translog multi-product cost function and its corresponding factor share equations to investigate the extents of scale and scope economies of Taiwan`s international tourist hotels. The empirical results show that product-specific scale economies exist for accommodation, food and beverage, as well as other services. Ray scale economies are significantly present. Economies of scope exist in providing food and beverage and other services jointly, as well as accommodation and food and beverage services jointly. However, economies of scope may not be present when accommodation and other services are jointly provided.