A method is presented to decide how to calculate the degree of scale economies from estimated transport cost functions which include aggregate output and attributes as arguments. It is shown that the cost elasticity of each of these aggregates should be weighed by a factor that depends crucially on the relation between the aggregate and the output vector. The method is applied to commonly used output indices and attributes, showing that the weights rank from one to zero. Some of them are interrelated and their values depend upon the operating rules of the firm. (Author/publisher).
Abstract