Economies of Scale and Scope in Local Public Transportation

This paper analyses the cost structure of the Swiss urban public transport sector in order to assess scale and scope economies. A multi-output cost function has been estimated for a panel data set of companies operating trolley-bus, motor-bus and tramway systems. The results suggest increasing retur...

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Bibliographic Details
Published in:Journal of transport economics and policy 2007-09, Vol.41 (3), p.345-361
Main Authors: Farsi, Mehdi, Fetz, Aurelio, Filippini, Massimo
Format: Article
Language:English
Subjects:
Business economics
Business structures
Economic costs
Economic models
Economies of scale
Economies of scope
Monopolies
Public transportation
Reforms
Studies
Transportation economics
Transportation modes
Urban economics
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Summary:This paper analyses the cost structure of the Swiss urban public transport sector in order to assess scale and scope economies. A multi-output cost function has been estimated for a panel data set of companies operating trolley-bus, motor-bus and tramway systems. The results suggest increasing returns to scale and economies of scope. This analysis has important policy implications in view of the ongoing reforms in several European countries in which competitive tendering is occasionally used to assign the provision of transport services to unbundled franchised monopolies. The significant scope economies provide some evidence in favour of integrated multi-mode operation as opposed to unbundling.
ISSN:0022-5258
1754-5951