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The production function exhibits decreasing returns, α+γ<1.
Variable returns to scale has two dimensions: increasing returns to scale (IRS) and decreasing returns to scale (DRS).
Eight of the 10 scale-inefficient hospitals had increasing returns to scale (IRS) while one of the hospitals revealed decreasing returns to scale (DRS).
alpha+beta+gamma+delta>1 and profit maximization will take place at the phase of decreasing returns to scale (DRS).
Except for Abomoso, all the other 7 scale-inefficient health centres manifested decreasing returns to scale (DRS).
For particular industries, however, it does not hold; in some cases increasing returns can be expected, and in others decreasing returns.
Decreasing Returns to Scale.
Therefore decreasing returns to scale, is validated.
Our methodology can be applied to any sector characterized by decreasing returns to scale technologies.
If F kL, kC) < kF L, C), there are decreasing returns to scale.
By contrast, the Czech Republic, Estonia, and Latvia show decreasing returns to scale.
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