Product Complementarity Research Articles

Population growth and optimality: when does serendipity hold?

"This note gives the conditions under which there is an interior optimum rate of population growth in a two-generations-overlapping model. These conditions imply complementarity both in production and in consumption. They also validate Samuelson's serendipity theorem."

Operating efficiency of Canadian banks

This article assesses Canadian banks' ability to realize scale economies and cost complementarities in joint production. The Canadian banking system, with its 10 or so large banks and 50 smaller ones, offers a good database for a study of efficiency, especially since previous work suggests that the system's concentration has had little impact on system competitiveness. This article estimates a system of cost and cost share equations using Zellner's iterative seemingly unrelated regression technique, then evaluates scale economies and cost complementarities from the estimated cost functions' first and second partial derivatives. The article compares a model that classifies deposits as inputs with another that classifies them as outputs. The empirical findings indicate that deposits are better modelled as outputs than inputs; that Canadian banks organize to exhaust available sources of scale economies and economies in joint production; and that conclusions regarding scale economies and cost complementarities differ importantly according to whether deposits are modelled as inputs or as outputs.

The Nestlé takeover of rowntree: A case study

Against a background of weak share price behaviour and weak (although improving) operating performance, Rowntree plc found itself subject to a Dawn Raid on its shares early in 1988 by Jacobs Suchard, the Swiss confectionery company. This seemed a good moment to turn previous collaboration discussions with Nestlé into a full-blown White Knight takeover. However, the discussions were very friendly: complementarity in products was clearly in evidence, and Nestlé saw much synergy through R and D, products, administration and sales force, leading to economies of scale. It is a Case Study of an eminently sensible integration of two companies in a competitive business. The negotiations were conducted in a mature way; there are echoes of style here of later takeovers like the end-1990 acquisition of Cruzcampo, the large Spanish brewery, by Guinness.

PRODUCER RISK, PRODUCT COMPLEMENTARITY AND PRODUCT DIVERSIFICATION

In this paper, a model is presented of the product diversification problem which features both producer risk aversion and product complementarity as determinants of product diversification. Although both risk aversion and product complementarity are, in the absence of the other, incentives to diversity production, when the two are present their joint influence may create a disincentive to diversification. In particular, an increase in the value of product complementarity may result in reduced product diversification for a risk‐averse producer.

Allocatable Fixed Inputs and Jointness in Agricultural Production: Implications For Economic Modeling: Comment

Some of the most challenging production economic concepts are those of interdependence and as pertaining to the products in a multiproduct firm. Thus, Shumway, Pope, and Nash should be applauded for their attempt to clarify these notions. However, their contention that allocatable fixed inputs can lead to jointness has mainly added to the confusion. It is demonstrated here that jointness, as traditionally represented, exists only with nonallocatable inputs, in direct contrast to what is suggested by Shumway, Pope, and Nash. This paper favors the jointness concepts from Carlson and Lau and suggests another kind of jointness based on Shumway, Pope, and Nash. Carlson's classic book still represents one of the most concise statements about the reasons for, and the character of, multiproduct firms and jointness. Carlson saw jointness as the primary reason for the existence of the multiproduct firm. As shown below, Carlson made the key points: (a) technical product complementarity may induce jointness; (b) all joint production, which arises from jointness, has the feature of being technically interdependent, whether of the complementary or competitive variety; and (c) over some ranges of multiproduct production, there could actually be technical independence. Seemingly, because of this last feature, we could find multiproduct firms without jointness in their technologies. However, Carlson would likely have argued that this situation does not occur bcause multiproduct firms are due to the lower costs under technically complementary products, or simply because the products can not be separated for the technically competitive case. The raison d'etre of the multiproduct firm rests in the jointness.

Using a semiotic approach to study the consumption of functionally related products

A semiotic approach to consumer behavior commits the analyst to the idea that configurations of complementary products derive their meaning in the same way that sentences do-via a mechanism of articulation in which parts are sorted out under syntactic constraints and with regard to the items which might have been substituted for any combinatory unit. In fulfilling their commitment to syntactic analysis, marketing scholars with explicitly semiotic orientations have been in the vanguard of those arguing that we need to supplement existing research on the purchase decision (with its focus on contrasts between a product and its substitutes) with research on the consumption experience (which entails a focus on the relationship between a product and its complements). This paper surveys the various approaches taken by semiotically-oriented scholars to the study of systems of complementary products, comparing and contrasting work done in an interpretive tradition with that done in positivist paradigms. Work on product complementarity which is not explicitly semiotic is also surveyed.

Complementarity in a Simple General Equilibrium Production Model

A simple three-factor, two-good general equilibrium model, allowing complementarity in production, is examined. Conclusions of general equilibrium economics with two factors must be reinterpreted and qualified when complementarity is possible. Sign patterns of how changing factor endowments affect outputs and how changing prices affect factor payments are uncovered for a small open economy. Results should prove valuable to a wide range of economists interested in extending general equilibrium analysis to include complementary factors of production.

Life-Cycle Effects on Consumption and Retirement

The effects on consumption and retirement of the length of the horizon are examined. At any given age people will work more and consume less if they expect to live longer. The Terman sample of gifted individuals in 1972 and 1977 is used to relate work status to the length of the horizon, as proxied by parents' longevity. The results suggest the expected positive effect on effort, but its magnitude is quite small. The panel from the Retirement History Survey is used, and effects of the horizon on consumption and retirement jointly are estimated for 1973 and 1975. There is a small positive effect of a more distant horizon (proxied by the number of living parents) on work effort and a stronger but still fairly small negative effect on consumption. Goods and leisure are consumed jointly, suggesting their complementarity in household production, and spending propensities out of social security wealth are far below those out of pension wealth.

MODELING LEARNING CURVE AND LEARNING COMPLEMENTARITY FOR RESOURCE ALLOCATION AND PRODUCTION SCHEDULING*

ABSTRACTResearch on learning effects in mathematical programming models for optimum resource allocation has called attention to the difficulty in solving such models in their original nonlinear form. In this paper, systematically varying sizes of linear segments are designed to approximate productivity changes along the learning curve, and a single separable linear programming model is developed. With production complementarity and learning transmission between products, a more realistic resource allocation and production scheduling problem emerges. Two cases of learning transmissions are considered, and the model design process, which defines a decision problem that can be solved by a simplex algorithm, is demonstrated.

Haciendas and Villages in Late Colonial Morelos

E _ VER since Moctezuma I established a lush retreat for the Aztec emperors at Oaxtepec, the unique climate and fertility of what is now the Mexican state of Morelos have caught the attention of conquerors, travelers, and scholars alike. This well-ordered, magnificently varied garden' so enchanted Fernando Cortes that he appropriated much of the area into his personal domain.2 In the nineteenth century Emperor Maximilian often sought repose in Cuernavaca, today's capital, and Fanny Calderon de la Barca marveled at the prodigality of nature with an enthusiasm today echoed in promotional literature distributed by Morelos's many spas and resorts.3 In a more analytical vein, modern geographer Ward Barrett has noted advantages of water, climate, soil, and proximity to urban markets that make Morelos unique in Mexico and that have given the state a distinct agricultural and social history. The complementarity of Morelos's diverse agricultural production with that of the higher and cooler Valley of Mexico has endured from pre-Hispanic times to the present. The area's suitability for sugarcane cultivation encouraged sixteenth-century Spaniards, beginning with Cortes himself, to establish haciendas and to import African slaves to work them. Because it remained an important center of indigenous population despite the encroachments of haciendas and the ravages of sixteenth-century epidemics, Morelos differed from other sugar colonies in the Western Hemisphere in that its plantations coexisted

The estimation of transport cost functions: a methodological review

Abstract This paper offers a review of the methodological aspects involved in the estimation of cost functions for the transportation industries. Major advances are detected in the econometrics involved in that estimation, particularly in terms of the usage of flexible forms in the functional specification. It is argued that, although theoretical properties of the cost function have been gradually incorporated in the applied work, the characterization and treatment of transportation output has received comparatively less attention. Virtually all studies up to date have used ton‐miles, or similar measures, as the basis for output description. Available studies present inconsistencies with observed industry behaviour, which makes policy conclusions potentially unreliable. Output exogeneity, which lies in the centre of the cost minimizing behaviour, has been offered weak justification. Better treatment of output measures and careful analysis of the behaviour of firms should be added to the econometric improvements already made, to allow for the analysis of production complementarity and to obtain more reliable conclusions.

Les répercussions agricoles de l'élargissement de la CEE à la Grèce

The large complementarity of agricultural production and trade of the EEC and Greece has favoured its association to the EEC and its membership as from January 1st 1981. For the future, the adoption by Greece of the common agricultural policy (CAP) should not result in an increased competitive capacity of Greek agribusiness within the Common Market, except for certain sensitive products subject to special transitory regulations, nor imply a change of traditional food and agricultural trade channels with third countries.

Product Complementarity in Production: The By-product Case

The product-product relationship has been a traditional subject of most production economics and farm management courses for the past two decades. Although the traditional examples of product-product optimization have come primarily from the agricultural production sector (e.g., legume-corn rotations and crop-livestock combinations), the concept is useful in analyzing the organization of any multi-product firm-including those firms which produce externalities in the form of environmental degradation.Three concepts or ideas usually are offered as giving rise to a positively sloped or complementary range on the product transformation surface-(l) one production process uses as an input a by-product of another production process, (2) one process uses quantities of a factor that are “surplus” to another, or (3) technical interaction (production function shifts) occurs.