Economics of Scale and Scope in Transport Activities



Economics of Scale and Scope in Transport Activities

Authors

JARA-DIAZ S, Universidad de Chile, Chile

Description

As transport activities mean displacements of individuals and goods in both time and space, the analysis of transport production involves the assignment of resources to generate trips among many different points in space during many different periods. As

Abstract

As transport activities mean displacements of individuals and goods in both time and space, the analysis of transport production involves the assignment of resources to generate trips among many different points in space during many different periods. As a consequence, the microeconomic analysis of transport production is far from a simple extension &the theory of the firm. Particularly, the concepts of scale and scope acquire very specialised meanings. In this paper we present the notions of economies of scale and scope in transport activities, as understood using a precise definition of transport output i.e. a vector of flows in a transport network, identifying the problems that arise due to the use of aggregates within the specification of transport cost functions. We review the approaches reported in the literature to overcome the ambiguity introduced by aggregates. Then we make an interpretation of the concepts of economies of scale, density and scope, within the context of transport cost functions with aggregate output indices. We show how to procede in some cases to obtain meaningful results, and what is still to be done. Particular emphasis is placed on the unsolved problem of measuring scope from aggregates.

Publisher

Association for European Transport