ECONOMIES OF SCALE IN THE TAXICAB INDUSTRY.

IN THE ARTICLE A MULTIPLE REGRESSION ANALYSIS IS USED TO ESTIMATE THE RELATIONSHIP BETWEEN TAXICAB COMPANY COSTS AND SIZE. THE RESULTS OF BOTH THE COST PER PASSENGER TRIP AND COST PER PASSENGER MILE MODELS ARE SAID TO IMPLY A U-SHAPED AVERAGE COST CURVE FOR SMALL TO MEDIUM SIZED TAXICAB COMPANIES. IT IS SHOWN THAT WITH UP TO 50-60000 TRIPS PER YEAR AVERAGE COSTS FALL WHILE FROM 75-250000 TRIPS PER YEAR, AVERAGE COSTS INCREASE. THE COST PER VEHICLE MILE MODEL IMPLIES THAT ONE REASON FOR DECREASING AVERAGE COSTS OF VERY SMALL OPERATORS IS THAT VEHICLES ARE NOT USED AS INTENSIVELY AS IN LARGER OPERATIONS. AS THE NUMBER OF VEHICLES INCREASES SO FURTHER REDUCTIONS IN COSTS PER VEHICLE MILE ARE RELATIVELY SMALL.