DEPICTING THE COST STRUCTURE OF ON URBAN BUS TRANSIT FIRM

Rinki Sarkar
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Rinki Sarkar: Delhi School of Economics

No 50, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: Unearthing the behaviour of costs is crucial for examining 'economic characteristics' of transportation industries. Cost functions that depict the relationship between costs and factors affecting costs can be empirically estimated to throw light on various economic facets of these industries such as the extent of scale economies, substitution possibilities between factors of production, the elasticity of demand for these factors. Possibilities of reaping economies of density and scope as well as productivity growth over time. This paper presents the results of an exercise to empirically estimate a 'cost function' for the transport wing of 'Bombay Electricity Supply and Transport Undertaking' (BES.T, Bombay). A host of ‘economic effects' have been derived and interpreted for the purpose of providing overall directions for the efficient operation of bus services. The need for technology upgradation. The significance of a rigorous maintenance policy, the necessity of designing, implementing and enforcing innovative 'bus priority measures' are some of the important implications that emerge from our analysis. Presence of different kinds of 'economies' within the existing set-up was also detected. Considerable cost savings would accrue by exploiting these economies judiciously.

Pages: 31 pages
Date: 1997-09
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