Calculation of Economies of Spatial Scope from Transport Cost Functions with Aggregate Output with an Application to the Airline Industry
Year: 2005
Type: article
Abstract: 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.
Authors: Leonardo J. Basso, Sergio R. Jara–Díaz
Institution: University of Chile
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2107963354