THE SHORT AND LONG-RUN COST OF BUS TRANSPORT IN URBAN AREAS

Abstract

A mathemtical model is developed to identify the behavior of cost in relation to size for municipal bus transport systems. Both fixed and variable costs are examined. The model is fitted to data for 1966-67 and results show that total costs are increasing more than proportionately to size. The nature of this non-linearity is explored in detail by looking at the cost-output relationship for components of the total cost, including labor, power, repair and maintenance, and overhead costs. The cost curve for 1971-72 shows that costs rose rapidly over the 5 years after 1966-67. Analysis reveals that this is primarily due to the increase in the fixed cost of providing bus services. In conclusion, the trend in fixed and variable costs from 1961 to 1972 is considered. /HRIS/