Rightly or wrongly government plays an important role in the investment and operating decisions of transport firms. The Interstate Commerce Commission oversees a complicated structure of rates and a point-to-point system of operating licences. For inland waterway transport, additional complications stem from the fact that the construction and maintenance of navigable waterways are controlled by Congress through the Army Corps of Engineers. It is necessary for Congress, the ICC, and the Army Corps of Engineers to cooperate and to pursue the national interest rather than the interest of any particular industry or company. These agencies therefore require knowledge of the underlying cost and demand functions. This paper is designed to provide some information on waterway cost functions. The object is to estimate long and short-term Quarterly observations were obtained on five firms for the period 1962-66 (although 17 of the 100 potential observations were not available). The five firms in the sample are major inland waterway carriers with diverse barging operations. They operate on all the navigable tributaries of the Mississippi and Gulf Intercoastal Waterway systems, including the Missouri River, the Gulf of Mexico and Lake Michigan. They offer a complete range of water transport services, both in commodities handled and in equipment available for freight transport. Two major trends have been evident in inland waterway transport over the last two or three decades. First, the cost per ton-mile has stayed about the same or fallen slightly, in contrast to the increase in most shipping costs. Second, a small number of firms have, through growth and merger, acquired a large share of the market. These trends, which are in contrast with those of other transport modes, might be explained by increasing returns to scale. Thus the major hypothesis is that the long-run average cost of a firm declines as the size of the firm expands. In addition, it is assumed that a firm's average cost also falls in the short run as output expands.

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  • Corporate Authors:

    London School of Economics and Political Science

    Houghton Street, Aldwych
    London WC2A 2AE,   England 
  • Authors:
    • Case, L S
    • LAVE, L B
  • Publication Date: 1970-5

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  • Accession Number: 00039894
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jan 22 1978 12:00AM