IN THE ARTICLE THE AUTHORS DEVELOP AND USE THE FRONTIER PRODUCTION TECHNIQUE IN ORDER TO TEST FOR THE EXISTENCE OF SCALE ECONOMIES IN THE US MOTOR CARRIER INDUSTRY. THE FRONTIER PRODUCTION FUNCTION ALLOWS EFFICIENCY INDEXES TO BE CALCULATED FOR EACH CARRIER IN A SAMPLE AND THEREFORE SERVES AS A BASIS FOR TESTING THE RELATIONSHIP OF SIZE AND EFFICIENCY IN THE REGULATED MOTOR CARRIER INDUSTRY. THE FRONTIER TECHNIQUE IS COMPARED TO THE STANDARD REGRESSION METHODOLOGY IN TERMS OF MODEL SPECIFICATION AND CONFORMITY TO THEORETICAL DEFINITIONS. THE STUDY CONCLUDES THAT ECONOMIES OF SCALE ARE NOT EVIDENT THROUGHOUT THE RANGE OF OUTPUT LEVELS. THRESHOLD EFFICIENCES ARE EXHAUSTED AT A RELATIVELY SMALL SIZE AND BECOME EVIDENT AGAIN AT THE LARGEST CARRIER SIZE.
Abstract