Based on the survey data of Taiwan's futures commission merchants (FCMs) in 2004, this paper applies Zellner's seemingly unrelated regression technique to a simultaneous system of a translog multi-product cost function and its corresponding factor share equations to investigate the extents of scale and scope economies of Taiwan's FCMs. The empirical results show that product-specific scale economies exist for brokerage service, as well as proprietary and other services. Ray scale economies are significantly present. The degrees of ray scale economies and the scale economies specific to the brokerage service rise as firm sizes increase for relatively larger FCMs. Economies of scope exist especially for small-sized FCMs.
