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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
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    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.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840500118465
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 37 (2005)
    Issue (Month): 12 ()
    Pages: 1399-1410

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    Handle: RePEc:taf:applec:v:37:y:2005:i:12:p:1399-1410

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    References

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    1. Madden, Gary G & Bloch, Harry & Coble-Neal, Grant, 2002. "Labour and capital saving technical change in telecommunications," MPRA Paper 10683, University Library of Munich, Germany.
    2. Appelbaum, Elie & Berechman, Joseph, 1991. "Demand conditions, regulation, and the measurement of productivity," Journal of Econometrics, Elsevier, vol. 47(2-3), pages 379-400, February.
    3. Dalen, Dag Morten & Gomez-Lobo, Andres, 1997. "Estimating cost functions in regulated industries characterized by asymmetric information," European Economic Review, Elsevier, vol. 41(3-5), pages 935-942, April.
    4. Giovanni Fraquelli & Massimiliano Piacenza & Graziano Abrate, 2001. "Costs and Technology of Public Transit Systems in Italy:Some Insights to Face Inefficiency," CERIS Working Paper 200112, Institute for Economic Research on Firms and Growth - Moncalieri (TO).
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    Cited by:
    1. 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.
    2. Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2006. "Economies of scale and scope in local public transportation," CEPE Working paper series 06-48, CEPE Center for Energy Policy and Economics, ETH Zurich.
    3. Carlo Cambini & Massimiliano Piacenza & Davide Vannoni, 2007. "Restructuring Public Transit Systems: Evidence on Cost Properties from Medium and Large-Sized Companies," Review of Industrial Organization, Springer, vol. 31(3), pages 183-203, November.

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