JOINT COST, PRODUCTION TECHNOLOGY AND OUTPUT DISAGGREGATION IN REGULATED MOTOR CARRIERS

The study uses a sample of 252 Class I Instruction 27 Motor Carriers (Instruction 27 carriers earned at least 75 percent of their revenues from intercity transportation of general commodities over a three year period) of general freight that existed continuously during the period 1965-1974 to estimate a long run cost function for the regular route, general freight section of the motor carrier industry. The functional form of the estimated equation belongs to the class of flexible, second order approximations to any cost function that are referred to as transcendental logarithmic or 'translog' functions. This class of functions does not make any prejudgments about the proper functional form, or the nature of the economic technology that motor carriers use to produce output; the functions may be derived from a Taylor's series expansion. The outputs are: (1) truck load ton-miles; (2) less-than-truck load ton miles; (3) pick up and delivery tons per hour and (4) terminal-platform tons. The inputs for which prices were included in the cost function are: (1) labor-salaried, clerical and other; (2) labor-linehaul; (3) labor-pickup and delivery and terminal platform; (4) other inputs not elsewhere classified; (5) purchased transportation; (6) owner-operators; (7) materials; (8) fuel, and (9) capital. The estimated cost function shows that there are no economies of scale in the domains for which the function was estimated, and that the usual representation of cost, using a Cobb-Douglas or CES function, is a serious misspecification because the true underlying function is non-separable and therefore the composition of output is a function of the level of factor prices.

  • Corporate Authors:

    Transportation Systems Center

    55 Broadway, Kendall Square
    Cambridge, MA  United States  02142
  • Authors:
    • Cherry, R C
  • Publication Date: 1978-11

Media Info

  • Pagination: 138 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00190909
  • Record Type: Publication
  • Source Agency: National Technical Information Service
  • Report/Paper Numbers: DOT-TSC-OST-78-19 Intrm Rpt.
  • Files: NTIS, TRIS
  • Created Date: Mar 28 1979 12:00AM