Transport network expansions have usually been analysed calculating returns to scale with variable network size (RTS), which has been shown to suffer from a number of shortcomings because, in the end, it attempts to capture as a scale property something that in fact is related with scope, namely the addition of new products when a transport network expands. In this paper the authors develop a method to calculate economies of spatial scope from transport cost functions with aggregate output, which is then illustrated using the results of a published study on airlines. We conclude that the method holds very well and that, coupled with the strict calculation of economies of scale (corrected returns to density), it permits a clear explanation of observed firm behaviour. (Author/publisher).
Abstract