Typically, firms change their size through a row of discrete leaps over time. A very basic model allowing for discontinuous growth can be based on a couple of assumptions: (a) in the short run, the firm’s equipment and organization provide the maximum profit only for a given production level,...

This paper investigates the cost and profit efficiency of German hospitals and their variation with ownership type. It is motivated by the empirical finding that private (for-profit) hospitals – having been shown to be less cost efficient in the past – on average earn higher profits than...