Estimation of urban bus transit marginal cost without cost data

The authors develop a method to study the industrial structure of urban bus transit without using cost data. To do so, they estimate the marginal cost function under the assumption that firms compete on frequency and adjust frequency to maximize profits. The authors' methodology is applied to Santiago, Chile. In this case, demand is modeled with a simplified model of transit network assignment. The goal is to consider how frequency, capacity, and on-board passengers affect the bus line’s demand. The marginal cost function is estimated by using the first-order conditions of the firm’s profit maximization problem, using the results of the demand model as data. The authors conclude that the urban bus transit industry in Santiago exhibits increasing returns to scale for low levels of demand and that these returns are exhausted rapidly at a moderate demand level. Additionally, firms exhibit economies of network expansion, on average.


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  • Accession Number: 01605342
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jul 1 2016 1:43PM