Improving urban transport performances by tendering lots: an econometric estimation of natural monopoly frontiers

William Roy (1) , Yves Croissant (1)

1 LET - Laboratoire d'économie des transports

Recently, some cities decided to divide their transport network into several attractive and accessible parts (this procedure is called allotment) in order to reduce urban transit costs. Gains obtained by introducing more competition for the market should be compared with costs associated with cutting the network into several parts, and this question is crucially linked with the measure of returns to scale. In this paper, we estimate a translog cost function on a panel of French urban transit networks. Our main conclusion is that scale economies are exhausted for a production corresponding to a city of about 200,000 inhabitants and that allotment, in terms of scale economies, would reduce costs for the seven biggest cities of our sample.

Mots clés: urban public transport industry; panel data; natural monopoly; allotment

Domaines: Economies et finances

William Roy, Yves Croissant. Improving urban transport performances by tendering lots: an econometric estimation of natural monopoly frontiers. 25e Journées de Microéconomie Appliquée, May 2008, Saint Denis (La Réunion), France. ⟨halshs-00122887v2⟩