COST STRUCTURE OF THE INTERCITY BUS INDUSTRY.

THE STUDY DESCRIBED ESTIMATES A MULTIPLE OUTPUT COST FUNCTION FOR THE PRODUCTION OF INTERCITY BUS-MILE DATA. OF THE PRIMARY RESULTS, THE FIRST IS THAT THE MARGINAL COSTS OF ALL SERVICES ARE NOT IDENTICAL WHERE THE GENERAL RANKING FROM LOWEST TO HIGHEST MARGINAL COST IS - SCHOOL, REGULAR-ROUTE, CHARTER, AND LOCAL ROUTES. THE SECOND CONCLUSION IS THAT SCALE ECONOMIES IN THE PRODUCTION OF INTERCITY BUS-MILES ARE EXHAUSTED AT AN OUTPUT LEVEL WHICH IS A SMALL FRACTION OF TOTAL INDUSTRY OUTPUT. IT WAS ALSO CONCLUDED THAT ECONOMIC EFFICIENCY OFFERS SOME GROUNDS FOR GOVERNMENT INTERVENTION IN THE INDUSTRY IN ORDER TO CO-ORDINATE SERVICES AMONG COMPANIES ALTHOUGH NOT NECESSARILY TO REGULATE ENTRY AND PRICES. (Author/publisher).