Economies of Scale in Esfahan Steel Mill Plant

Steel industry is considered as one of the most important component of
industrialization , and most of the developing countries wish to have
prosperous steel plants. Despide po ssessing a good potential inenergy ,
mineral and human resources , we do not yet enjoy a major share in the
world steel trade. Based on favorable economic returns in steel industries , we would expect to profit from our comparative advantages. In this
research we examine the factors which reduce the production costs, and we try to identify the most suitable cost functions. Our model consists of
translog cost functions, and show how the Esfahan steel mill could profit
from the economies ofscale. Through the "Iterative seemingly Unrelated
Regrenions" , we observed that this plant may ha ve considerable
economies of scale.