Scale Economies, Elasticities of Substitution and Behaviour of the Railway Transport Costs in Spain
7.5 Summary and Conclusions
In this paper, we have studied the behaviour of state company RENFE costs from 1964 to 1992. Translog function with the restriction of grade-one homogeneity in the factor prices, has been analized and acceptable results have been obtained for the vehicles-km output. The cost function estimated has an good behaviour since it meets the conditions of monotonicity, quasi concavity and grade-one homogeneity in the factor prices.
The comparison between elasticities support the results in previous research since it can be observed that the Allen elasticities of substitution with respect to the Morishima elasticities, overestimate both the substituibility and complementariety relationships.
The estimations basically find that the industry is characterized by constant returns to scale.
KeywordsScale Economy Input Price Factor Price Translog Cost Function Translog Function
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