Economies of Size and Scope in Rural Low-Volume Roads

Abstract

Evidence on cost savings from reorganizing township low-volume rural road systems into larger units is presented in this study of technical efficiencies in producing local government services. Data is from a sample of midwestern townships. Heterogeneity of surface types is accounted for by specifying a multiple output translog cost function. Examination of economies of size suggests that cost savings could be realized by reorganizing townships into larger units. The presence of economies of scope suggests that jurisdictions should not specialize in maintenance responsibilities due to the joint use of inputs.