Estimating the Translog Cost Function for the Telecommunications Sector in Saudi Arabia: The Case of Saudi Telecom Company: An Empirical Study

The objective of this research paper is to estimate a translog cost function for the Saudi Arabian telecommunications sector. Telecommunications sector is one of the rapidly growing sectors during the past decade nationwide. A Saudi Telecom Company (STC) data set has been used, as STC has the largest share of the telecommunications sector in Saudi Arabia. Three input cost factors have been considered: marketing and sales, capital and other expenditures. The outputs were total revenue and number of subscribers. The estimation results show that marketing and sales costs are the most important productive components and that capital costs come next. The demand price elasticity values suggest that capital is the most important factor in terms of price sensitivity, which underlines the importance of capital and technology supplies as a necessary component, primarily for the telecommunications sector. From the findings, the telecom sector today relies on advanced technology that incurs high cost. Searching for appropriate funding mechanisms is logical and even necessary for sophisticated technologies and increasing costs. Upgrading marketing techniques, supporting customer services programmes and developing training programmes would yield excellent outcomes and enhance performance. The estimation results end with checking the existence economics of scale, and it has been found that the industry has increasing returns to scale. Therefore, it would be highly recommended to expand the services offered by the telecommunications sector.

ECONOMICAL BEHAVIOR ANALYSIS OF AGRICULTURAL COMPANIES IN IRAQ USING TRANSLOG COST FUNCTION

This research aims to identify the productive relationship nature among the elements used in the agricultural companies by estimating the translog cost function. It also aims to recognize the possibility of substituting these elements with each other, to identify the nature of revenues, and economies scale through elasticity of other cost. This research goes further to define the typical use of resources, identify the performance of the companies and their contribution in controlling their cost, and estimating elasticity of substitution (Allen-Uzawa), (Morishima). The translog cost function was estimated so as the total cost of the agricultural companies is a function of the prices of production and production quantity output elements. The shares of production elements (labor, capital, commodity and services requisites) were derived from this translog cost function by using SUR method and Eviews9 after applying symmetry and homogeneity. It was clear, in the translog cost function or in the production elements share functions, that there is a strong correlation between the prices of the production elements and the total costs. If prices increase, their contribution share in the total costs increases. Calculation were made among production elements, the self demand, cross, and substitution elasticity. Results show that the self demand was ( 0.64،2.01 ، 0.02،2.28). This result clarifies the share of the production elements (labor, capital, commodity and services requisites) in the total costs of the agricultural companies. The results show that increasing in the wage of labor, capital prices, and commodity and services requisites with 1% had led to increase in the demand on labor, capital prices, and commodity and services requisites with ( 0.64%, 2.10%, 0.02%, and 2.28% ) respectively. The elasticity (Allen – Uzawa) of partial substitution between the labor and capital was 0.0009. This indicates that increasing the capital price value to the labor wage with rate of 1% will decrease the capital element rate to the labor wage with 0.0009%. This is a very low rate. The elasticity of partial substitution (Morishima) for the elements of production shares was (2.1, 0.02, 2.27, and 0.06).