The Measurement of the Economies of Scope and of Scale on Japanese Local Tram Operating Companies

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Abstract

The purpose of this paper is to measure the economies of scope and of scale on Japanese tram industry. Balanced panel data from 2005 to 2014 for Japanese local tram operating companies by operating both tram business and rail business are analyzed using several different cost functions. Several policy applications are presented. Scope economies, all product economies and product-specific economies for tram business and rail business exist. The economies of scope has more cost saving effects than the economies of scale on tram business and rail business, and the economies of scale on all products.