Abstract

This paper analyses the cost structure of a sample of Italian Local Public Transport (LPT) companies operating in large urban centers and metropolitan areas, with the aim to extend the evidence of some recent studies focused only on small and medium-sized operators. Technological characteristics of LPT systems (i.e. returns to scale and to network density) are investigated by estimating a "translogaritmic" variable cost function model, which includes "firm-specific" fixed effects and considers three alternative supplyoriented output measures (seat-kilometers, vehicle-kilometers, total seat-kilometers). The results show the presence of remarkable short-run and long-run scale economies, as well as of economies of network density, regardless of the type of service provided (urban, intercity or mixed). In particular, the study provides novel evidence on the cost properties characterizing large-sized companies, for which, due to the recent reform involving the Italian LPT sector, regulatory and network design issues play a crucial role.