Melville L. McMillan

Melville L. McMillan; Debasish Datta

The results of using data envelopment analysis (DEA) to assess the relative efficiency of 45 Canadian universities are reported. Outcomes are obtained from nine different specifications of inputs and outputs. The relative efficiencies are quite consistent across the alternative specifications. A subset of universities - including universities from each of three categories (comprehensive with medical school, comprehensive without medical school, and primarily undergraduate) - are regularly found efficient and a subset quite inefficient but, overall and for most universities, the efficiency scores are relatively high. Simulation of the recent 20-percent cut in provincial grants to the Alberta universities illustrates how potential efficiency improvements (as implied and measured by this methodology) might be realized but it also illustrates certain limitations. Regression analysis is used in an effort to identify further determinants of efficiency. While there are limitations to the methodology and the available (especially output) measures which makes the specific efficiency outcomes tentative, this analysis provides insight to university productivity in Canada and its analysis.

Melville L. McMillan; Wing Hong Chan

Abstract Efficiency scores are determined for Canadian universities using both data envelopment analysis and stochastic frontier methods for selected specifications. The outcomes are compared. There is considerable divergence in the efficiency scores and their rankings among methods and specifications. An analysis of rankings, however, reveals that the relative positions of individual universities across sets of several efficiency rankings (e.g., all the data envelopment analysis and stochastic frontier outcomes) demonstrate an underlying consistency. High‐efficiency and low‐efficiency groups are evidenced but the rank for most universities is not significantly different from that of many others. The results emphasize the need for caution when employing efficiency scores for management and policy purposes, and they recommend looking for confirmation across viable alternatives.

Melville L. McMillan; Richard Carlson

Contrary to the results of similar studies in metropolitan areas, this investigation found no evidence that local property taxes and public expenditures were capitalized into the value of owner-occupied homes in small cities despite their considerable dependence upon the property tax. This does not imply that residents of small cities are insensitive to fiscal differences but rather is evidence of the more elastic supply of land for housing in nonmetropolitan communities.

Melville L. McMillan

Abstract Using data for fire protection services, this brief paper provides empirical evidence in large part demonstrating the existence of the “zoo effect” identified by Oates. The “zoo effect” implies an upward bias in the measurement of congestion in local public good provision resulting from the lack of a range or quality of service measure. The introduction of a quality measure is found to reduce estimates of the degree of congestion in fire protection services.

Melville L. McMillan; Joe Amoako-Tuffour

Relatively unique data on the costs of public services for local governments in Victoria, Australia, are used to estimate a system of demand equations and to test alternative specifications of the underlying preferences using a translog model. Symmetry conditions are rejected so the data are not consistent with constrained utility maximization. A nonparametric test confirms that result. Conditional on symmetry, tests reject homogeneity and the additivity of preferences and also the separability of personal and property services. Copyright 1988 by MIT Press.

Stuart Landon; Melville L. McMillan; Vijay Muralidharan; Mark Parsons

Health spending, the largest component of provincial government spending, has risen significantly over the past decade. It has been asserted that larger health expenditures have caused provincial governments to spend less on other types of government services. Using a panel of province-level data for the period 1988/89 to 2003/04, this study provides a test of the hypothesis that health spending has crowded out other types of spending. The results indicate that, for the period studied, there is no evidence that increased provincial government health expenditures resulted in lower levels of spending on other categories of government provided goods and services.

Melville L. McMillan

Attempts to measure the willingness to pay for public goods, such as environmental quality, have relied largely on estimates derived directly from hedonic functions explaining property values despite recognized limitations. Here, hedonic prices are used to create a system of budget share (demand) equations for housing characteristics so that the demand for the environmental public commodity can be estimated within the housing budget constraint. Estimated expenditure, price and substitution elasticities are derived for both direct and indirect specifications. The assumptions of homotheticity and additivity of the underlying preferences are tested for and rejected.

M. A. Taher; Melville L. McMillan; Adolf Buse; David Gillen

Abstract The role of natural resource inputs in Canadian manufacturing is investigated for the 1961–1976 period with a five factor value-added translog model. Price and substitution elasticities are reported for total manufacturing, twenty two-digit manufacturing industries and three sub-aggregates of total manufacturing (based on natural resource inputs). For capital, labour and energy, the elasticities are comparable with those reported elsewhere. For natural resource inputs, the price elasticities are low and the possibilities of substitution limited,

M. A. Taher; Melville L. McMillan

Abstract Although materials constitute over 60 percent of the total manufacturing industrys costs, vary widely in form, and have experienced considerable price variation, material inputs have received little attention in production studies. This paper reports on a study of this neglected topic. For seven two-digit industries utilizing significant primary natural resource inputs, the production relationships are examined with materials input disaggregated into renewable resources, non-renewable resources and other intermediate inputs. Labor, capital and energy are the other factors of production. The non-homothetic form of the translog model is found to be the most appropriate specification. The results indicate that the opportunities for substituting labor and capital for material inputs is limited — complementarity or weak substitutability prevail. Although separability of other intermediate material inputs is rejected, specifications excluding this input yield similar results.

Melville L. McMillan; Joe Amoako-Tuffour

Little is known about local public services demands in rural municipalities and how they differ from demands in urban municipalities. Local public sector output demands in rural and urban municipalities in Victoria, Australia, are studied here using a system of equations approach based on the translog model. Expenditure, price, and substitution elasticities are reported. Demands differ between rural and urban municipalities and even among the (especially urban) subclasses.