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Economies of Scale and Scope in Local Public Transportation

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  • Mehdi Farsi
  • Aurelio Fetz
  • Massimo Filippini

Abstract

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. © 2007 LSE and the University of Bath

Suggested Citation

  • Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2007. "Economies of Scale and Scope in Local Public Transportation," Journal of Transport Economics and Policy, University of Bath, vol. 41(3), pages 345-361, September.
    • Handle: RePEc:tpe:jtecpo:v:41:y:2007:i:3:p:345-361
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