Cost structure and technological change of local public transport: the Kaohsiung City Bus case
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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Volume (Year): 37 (2005)
Issue (Month): 12 ()
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References listed on IDEAS
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- 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.
- 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) -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO).
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- 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.
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