Economies of Scale in Public Transportation

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Economies of Scale and Scope in Local Public Transportation:
The study tires to make a contribution to the debate on the introduction of competitive tendering procedures in the urban bus transport sector. The paper tries to investigate to what extent multi-mode suppliers could use the scope and scale economies to reduce their costs in comparison to a group of single-mode operators offering to provide local transit services. The model specification used in the analysis is based on a cost function with three outputs, namely, transport services in three modes (The considered transport modes are motor-bus, trolley-bus, and tramway systems.) and two inputs, labor and capital.
The results indicated considerable economies of scope, suggesting that unbundling a multi-mode company into single-output companies might lead to higher costs as the synergies in the joint production can no longer be exploited. Moreover, the results indicate increasing returns to scale in almost all outputs, which combined with cost complementarity, can be considered as a suggestive evidence for natural monopoly. Alternatives like introduction of incentive regulation schemes are suggested by the author to increase competition amongst bidders to improve cost structure in each mode of transport.

An empirical study of the Cobb–Douglas production function properties of software development effort

The paper concludes that software size and team size have a Cobb–Douglas relationship with software development Effort, which means that for a fixed software size and team size a unique minimum software development effort exists. The paper also demonstrates that increasing returns to scale economy exists, which means that when software size and team size are considered in software effort estimation models, non-linear models will provide a better estimate than linear models. Additionally, for large size projects linear models may be prone to large errors. The author concludes with a caution that project managers’ should be careful about adding more manpower as it may lead to more software development effort as predicted by the non-linear estimation equation