Costs, Economies of Scale and Factor Demand in Road transport

Costs, Economies of Scale and Factor Demand in Road transport

The author, using a general translog cost function, finds that there are economies of scale in bus transport in Israel. The industry is concentrated in private ownership and serves a densely populated area. Own-price elasticity is larger for capital than for labour.

Share Content

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn

Related Articles

On the Calculation of Scale Economies from transport Cost Functions

A method is presented to decide how to calculate the degree of scale economies from estimated transport cost functions which include aggregate outputs as arguments. It is shown that the cost elasticity of each of these aggregates should be weighted by a factor that depends crucially on the relation between the aggregate and the output vector.

View Journal »

Re-evaluating Returns to Scale in transport

The paper argues that output characteristics are positively correlated with, and influenced by, firm size. When firm size increases, output characteristics also change in a direction that reduces unit costs. Drawing on evidence from the US trucking industry, an appropriate specification indicates that economies of scale may well exist.

View Journal »