For more than twenty years, the cost structure of transport industries in general, and the airline industry in particular, has been analyzed through the calculation of two indices: returns to density (RTD) and returns to scale (RTS), which were originally proposed by Caves et al. (1984). During this period, there have been many observations, amendments, caveats and corrections about their calcu...

We analyze the dynamics of a game of sequential bidding in the presence of stochastic scale effects in the form of stochastic economies or diseconomies of scale. We show that economies give rise to declining expected equilibrium prices, whereas the converse is not generally true. Moreover, first– and second–price auctions are not always revenue equivalent. Indeed, economies of scale make the se...

Background Many economic evaluations ignore economies of scale in their cost estimation, which means that cost parameters are assumed to have a linear relationship with the level of production. Economies of scale is the situation when the average total cost of producing a product decreases with increasing volume caused by reducing the variable costs due to more efficient operation. This study i...

Rather than adding up all cost items of ship operation in the traditional vessel-based approach, this paper develops a theoretical model to evaluate and decompose the total factor productivity (TFP) growth of the container shipping industry in Taiwan. The results show that scale economies and ship size economies play the dominant roles in improving TFP growth. Since 2006, the dominance of TFP g...

In this paper, we present calculations of the economic gains in terms of reduced costs by exploiting scale-economies in dairy production in Norway, and the effect this would have had on the number of farms. We also explore whether or not optimal scale and unexploited scale-economies change over time due to scale-augmenting technical change. The analysis is based on homothetic cost functions est...