THE MEASUREMENT OF RETURNS TO DENSITY AND SIZE FOR PUBLIC BUS OPERATIONS IN JAPANESE METROPOLITAN AREAS

Abstract

This paper measures returns to density and size for Japanese public bus operations in metropolitan areas. When returns to density are increasing, bus operations enjoy scale economies, the route length fixed. When returns to sizes are increasing, bus operations, allowed to change the route length, enjoy scale economies. Translog cost function of bus operations is estimated, using 6 metropolitan bus operations' data pooled from 1980 to 1985, in order to measure the degrees of returns to density and size. The estimates of returns to density and size could be obtained, using estimated parameters of the cost function. It is observed that the returns to density is increasing, evaluated at the sample mean. The public bus operations exhibit economies of density. On the other, the returns to size are decreasing, evaluated at the sample mean. Bus operations exhibit diseconomies of size. Then, more frequent operations enable Japanesee public bus operations in metropolitan areas to enjoy scale economies, based on the estimates of returns to density and size.