MEASURING ECONOMIES OF SCALE AND SCOPE IN THE TELECOMMUNICATIONS INDUSTRY

摘要

This paper proposes the concept of superaddtive profit function, which can lead torndiversification of business portfolio by firms. The superadditive profit function conceptrnincludes economies of scope as well as superadditive revenue function. This paperrnexplores bundled consumption of telecommunication services and illustrates the impactrnof growing data traffic on the economies of scale in the telecommunications industry byrnusing a firm’s data. In order to illustrate average cost curves, pseudo subscriber numberrnconcept is proposed and used in this paper. Growing data traffic does not seem to havernincreased cost of capital significantly for the past few years in Korea.