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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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    References listed on IDEAS

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    1. 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.
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    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.
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    Cited by:

    1. Andrea Boitani & Marcella Nicolini & Carlo Scarpa, 2013. "Do competition and ownership matter? Evidence from local public transport in Europe," Applied Economics, Taylor & Francis Journals, vol. 45(11), pages 1419-1434, April.
    2. Hassold, Stephan & Ceder, Avishai (Avi), 2014. "Public transport vehicle scheduling featuring multiple vehicle types," Transportation Research Part B: Methodological, Elsevier, vol. 67(C), pages 129-143.
    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;The Industrial Organization Society, vol. 31(3), pages 183-203, November.
    4. 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.
    5. 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: The Challenge of Local Government Size, chapter 6, pages 148-170 Edward Elgar Publishing.
    6. Philippe Gagnepain & Marc Ivaldi & Catherine Muller-Vibes, 2011. "The Industrial Organization of Competition in Local Bus Services," Chapters,in: A Handbook of Transport Economics, chapter 32 Edward Elgar Publishing.
    7. 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.
    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: The Challenge of Local Government Size, chapter 6, pages 148-170 Edward Elgar Publishing.
    9. 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.
    10. Philippe Gagnepain & Marc Ivaldi & Catherine Muller-Vibes, 2011. "The Industrial Organization of Competition in Local Bus Services," Chapters,in: A Handbook of Transport Economics, chapter 32 Edward Elgar Publishing.

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