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Cost structure and technological change of local public transport: the Kaohsiung City Bus case

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  • Judy Shaw-Er
  • Wang Chiang
  • Ya-Wen Chen

Abstract

This study has developed a translog cost function for the Kaohsiung City Bus (KCB) to analyse its cost structure and economic characteristics, based on monthly data over the time period from January 1996 to December 2000. The empirical results reveal that economies of density in the provision of bus services in Kaohsiung do prevail. The estimated marginal cost, which is less than the average cost but greater than the current bus fare, indicates that the subsidy is necessary. Due to the existence of returns to density (RTD), the KCB could obtain cost-saving benefits by extending its output scale. The KCB production technology is also not neutral. The effects of technological change on the KCB costs suggest that over the period 1996-2000 technological progress did lead to cost saving; the pure productivity growth rate increased from 0.45% in 1998 to 3% in 2000.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:applec:v:37:y:2005:i:12:p:1399-1410
    DOI: 10.1080/00036840500118465
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    5. Daniel Albalate & Germà Bel & Joan Calzada, 2010. "Urban transport governance reform in Barcelona," IREA Working Papers 201009, University of Barcelona, Research Institute of Applied Economics, revised Jun 2010.
    6. Terence tai-leung Chong & Angela Fung & Wing-ting Lee & Ka-lai Man, 2009. "Hedonic pricing models for metropolitan bus services," Economics Bulletin, AccessEcon, vol. 29(2), pages 630-637.
    7. Filippini, M. & Koller, M. & Masiero, G., 2015. "Competitive tendering versus performance-based negotiation in Swiss public transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 82(C), pages 158-168.
    8. Germà Bel, 2013. "Local government size and efficiency in capital-intensive services: what evidence is there of economies of scale, density and scope?," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 6, pages 148-170, Edward Elgar Publishing.
    9. de Grange, Louis & Troncoso, Rodrigo & Briones, Ignacio, 2018. "Cost, production and efficiency in local bus industry: An empirical analysis for the bus system of Santiago," Transportation Research Part A: Policy and Practice, Elsevier, vol. 108(C), pages 1-11.
    10. Philippe Gagnepain & Marc Ivaldi & Catherine Muller-Vibes, 2011. "The Industrial Organization of Competition in Local Bus Services," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 32, Edward Elgar Publishing.
    11. Cubukcu, K. Mert, 2008. "Examining the cost structure of urban bus transit industry: does urban geography help?," Journal of Transport Geography, Elsevier, vol. 16(4), pages 278-291.
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