Diversification strategies and scope economies: Evidence from a sample of Italian regional bus transport Pproviders
A growing number of local public transport (LPT) companies diversify their production lines by providing a large set of services. We investigate the cost structure of a sample of LPT companies operating in Italy in order to assess the presence and the magnitude of scope economies. We split thewhole sample of firms according to the diversification strategy: private firms, mainly diversifying in competitive transport-related services and public firms providing non-transport services in regulated markets. Regardless of the functional form and the method used, scope economies appear sizeable for both groups but higher for firms pursuing a transport related strategy, suggesting it should be preferable to the multi-utility development pursued by public LPT firms.
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