Density and Scale Economies in the Public Road Transport: Empirical Evidence for Tunisia
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Density and Scale Economies in the Public Road Transport: Empirical Evidence for Tunisia Mohamed Amine Mezghani 1 & Younes Boujelbene 1
Received: 27 January 2016 / Accepted: 19 October 2016 # Springer Science+Business Media New York 2016
Abstract This paper examines economies of scale and density in road transport. This study seeks to broaden the knowledge in the impact of the economies of scale and density drawn in and by the road transport sector in Tunisia. This investigation aims to not only grasp the possibility of a substitutability of the production factors used but also highlight the importance of the global productivity achieved in the operation of means of transport for the users and the community. The investigation of the 12 road transport companies in Tunisia reveals the existence of a homogeneity in the total production of these companies which vary with the size of the networks, the number of stops, and the number of employees, although it exists a strong heterogeneity concerning. This study shows the importance of enhancing a number of policies recommendations for the Tunisian road transport system through the joint improvement of the road infrastructure policy, of the fuel price policy, and of the fuel-efficient road vehicle policy in order to maintain sustainable road transport network. Keywords Economics of scale . Density . Transport sector . Trans-logarithmic function
Introduction Transportation is lifeline of economic development and also an important component of the support, services, and security system in sustainable and healthy development of national economy (Wang and Lu 2014). Since the seminal work by Marshall, Alfred (2006), when a company reduces costs and increases production volume, the internal economies of scale have been achieved. External economies of scale (EES) occur outside of the firm and within an industry. In fact, when an industry’s scope of
* Mohamed Amine Mezghani [email protected]
1
Department of Management, University of Management and Economic Sciences of Sfax, Street of Airport km 4.5, LP 1088, 3018 Sfax, Tunisia
J Knowl Econ
operations expands (due to the creation of a better transportation network that resulting in a subsequent decrease in cost for a company working within that industry), the EES are said to have been achieved. During the last decades, many scientific, analytical, and empirical works have attempted to study the findings of the economies of scale and density in the public road transport sector. In the seventies of the last century, these works were interested in the concept of the substitutability, their total productivity, and the relative concept to price elasticity and costing as well as economies of scale and density. The previous main empirical works were based on cost estimates and production technology that can influence the charging structure in the transport sector. More precisely, these inputs were based on linear cost functions, the CobbDouglas functions, the Keller functions, and the Diwert second order translog arbitr
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