• The Journal of the Korea Contents Association
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• v.13 no.11
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• pp.176-186
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• 2013

The purpose of this study is to investigate the economies of scale and scope in the medical service industry of Korea using the multiple output translog cost function. The results show that the single-product scale economy (SSE) estimated is highly significant and less than one, implying that Korean medical service institutes are on average enjoying the product-specific scale economy in providing their services. In addition, the ray scale economies (RSE) reflects the overall economy of the scale in individual firm, showing less than one. Thus, the medical service industry in Korea is generally operating in the region of increasing returns to scale. The findings provide evidence of the economy of scope, in particular, with the joint production of inpatient and outpatient services as well as inpatient and administrative services.