COSTS, ECONOMIES OF SCALE AND FACTOR DEMAND IN BUS TRANSPORT

The study uses a two-factor translog cost function model, which is subject to very few a priori restrictions, to investigate the cost structure of bus transport analysing relationships between production cost and output and input factor prices. Also evaluated is the demand for factors of production, factor substitution and price elasticities. The data base investigated represents the Israeli bus sector. The empirical results tabulated include scale economies, fixed factor proportions - type production technology, non-linear separability of factors in cost functions, and also small own-price elasticity of demand of labour relative to capital. (A)