Journal of Productivity Analysis

, Volume 2, Issue 2, pp 91–102 | Cite as

Marginal and total production cost indices: Theory and applications

  • Michael R. Baye
  • Mary E. Deily
  • Dennis W. Jansen
Article

Abstract

We show that the total cost of production index and the marginal cost of production index may be used to illuminate the course of an industry's evolution. Each of these summary statistics conveys different bits of information about the industry. Theoretical properties of the indices are compared, and then the indices are applied to data from the steel industry to illustrate how changes in the indices over time reflect fundamental changes in industry conditions.

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Copyright information

© Kluwer Academic Publishers 1991

Authors and Affiliations

  • Michael R. Baye
    • 1
  • Mary E. Deily
    • 2
  • Dennis W. Jansen
    • 3
  1. 1.Department of EconomicsThe Pennsylvania State University, and Center for Economic ResearchUSA
  2. 2.Department of EconomicsLehigh UniversityUSA
  3. 3.Department of EconomicsTexas A&M UniversityUSA

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