Constant returns to scale for prescription dispensing in U.S. community pharmacy

By using data from a sample of 1767 community pharmacies, a total cost function was estimated by a polynomial regression of total cost on output. The Cobb-Douglas production function was estimated by a multiple linear regression of natural logarithmic transformations of output on natural logarithmic transformation of labor and capital. No economies of scale were found in prescription departments. Cost data led to a conclusion of constant marginal costs.