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Analysis of the cost structure of an urban bus transit property

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  • Berechman, Joseph
  • Giuliano, Genevieve

Abstract

Past research on the cost structure of urban bus transportation shows conflicting results with respect to key economic issues such as economies of scale and other properties of the underlying technology. It is hypothesized that these results stem from three major problems areas: the form of the estimated cost model, definition of the output measure and major characteristics of the data base. Utilizing longitudinal data from one bus property, this study estimates a general cost model which places very few a priori restrictions on the production structure. In addition, two different output measures are defined, and the cost model is estimated separately for each. Results of the study presented in this paper indicate that the general form cost model better represents bus transit technology than other more restrictive models, and that different output measures have a significant effect on the measurement of economies of scale. Results pertaining to factor substitution, separability, and homotheticity are also presented.

Suggested Citation

  • Berechman, Joseph & Giuliano, Genevieve, 1984. "Analysis of the cost structure of an urban bus transit property," Transportation Research Part B: Methodological, Elsevier, vol. 18(4-5), pages 273-287.
    • Handle: RePEc:eee:transb:v:18:y:1984:i:4-5:p:273-287
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    Cited by:

    1. Karlaftis, Matthew & McCarthy, Patrick, 1999. "The Effect of Privatization on Public Transit Costs," Journal of Regulatory Economics, Springer, vol. 16(1), pages 27-43, July.
    2. Iseki, Hiroyuki, 2008. "Economies of scale in bus transit service in the USA: How does cost efficiency vary by agency size and level of contracting?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(8), pages 1086-1097, October.
    3. Yves Croissant & William Roy & Joan Canton, 2013. "Reducing urban public transport costs by tendering lots: a panel data estimation," Applied Economics, Taylor & Francis Journals, vol. 45(26), pages 3711-3722, September.
    4. de Rus, Gines, 2001. "Competencia en transporte público y plazos concesionales en España [Competition in public transport and concession contracts]," MPRA Paper 12651, University Library of Munich, Germany.
    5. Amaral, Miguel, 2008. "Public vs private management of public utilities - The case of urban public transport in Europe," Research in Transportation Economics, Elsevier, vol. 22(1), pages 85-90, January.
    6. Juan Luis Gómez-Reino & Santiago Lago-Peñas & Jorge Martinez-Vazquez, 2021. "Evidence on Economies of Scale in Local Public Service Provision: A Meta-Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper2116, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Batarce, Marco & Galilea, Patricia, 2018. "Cost and fare estimation for the bus transit system of Santiago," Transport Policy, Elsevier, vol. 64(C), pages 92-101.
    8. Obeng, Kofi & Talley, Wayne K. & Colburn, Christopher, 1995. "The Effects of Subsidies on Public Transit Long-Run Costs," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 35(1).
    9. Judy Shaw-Er & Wang Chiang & Ya-Wen Chen, 2005. "Cost structure and technological change of local public transport: the Kaohsiung City Bus case," Applied Economics, Taylor & Francis Journals, vol. 37(12), pages 1399-1410.
    10. Yossi Berechman & Bekir Bartin & Ozlem Yanmaz-Tuzel & Kaan Ozbay, 2011. "The Full Marginal Costs of Highway Travel: Methods and Empirical Estimation for North America," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 19, Edward Elgar Publishing.
    11. Ripplinger, David G. & Bitzan, John D., 2018. "The cost structure of transit in small urban and rural U.S. communities," Transportation Research Part A: Policy and Practice, Elsevier, vol. 117(C), pages 176-189.
    12. Obeng, K., 1985. "Variables Affecting BNS transit productivity," Transportation Research Forum Proceedings 1980s 311759, Transportation Research Forum.
    13. Keough, Michael, 1987. "Scale Economies Among United States Public Bus Systems," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 28(1).
    14. Rinki Sarkar, 1997. "Depicting The Cost Structure Of On Urban Bus Transit Firm," Working papers 50, Centre for Development Economics, Delhi School of Economics.
    15. D. Fabbri, 1996. "La Stima di Frontiere di Costo nel Trasporto Pubblico Locale: una Rassegna e un'Applicazione," Working Papers 270, Dipartimento Scienze Economiche, Universita' di Bologna.

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