Analysis of Technology Bus Firms (1989)

 

©Antti Talvitie and Tom Backstrom, 1989

Analysis of Technology Bus Firms

Finnish Economic Papers - Volume 2-Number 2-Autumn 1989

Antti Talvitie

Finland Highway and Waterway Administration, SF-00521 Helsinki
and
Tom Backstrom

Helsinki School of Economics and Business Administration, SF-00100 Helsinki

ABSTRACT

The study examines the structure of technology of (Finnish) bus companies. Economies of scale and scope, effect of service type and peaking on the average costs, substitution of factors of production, and technical change are analyzed. The majority of the Finnish bus companies operate at too low a level of production to be cost efficient. With »average» product mix the optimum level of output is 6.5 million bus kilometers per year on the Finnish market. The companies can obtain a cost advantage by having a versatile product-mix. The marginal costs of (six) service types change together with the productmix. The peak period marginal costs are similarly dependent on the productmix which influences how efficiently the capacity, often acquired to satisfy the peak period demands, can be utilized outside the peak period.

FULL PAPER, Pdf, 718 KB, 13 pages.