Cost, production and efficiency in local bus industry: An empirical analysis for the bus system of Santiago

Document Type

Journal Article

Publication Date


Subject Area

place - south america, place - urban, mode - bus, economics - operating costs, economics - economies of scale, economics - fare revenue, economics - subsidy


Bus industry, Diseconomies of scale, Returns to scale, Technical efficiency, Transantiago


The aggregate cost structure of the Santiago (Chile) urban bus transport industry is studied for the presence of economies of scale, return to scale and technical efficiency. Econometric models using both operator cost and revenue (fares plus subsidy) data show that larger operators under Transantiago had higher average operating costs than the smaller ones; we obtain a similar conclusion when analysing production and the efficiency of firms: we estimate decreasing returns to scale in production, and that larger operators would be more inefficient than smaller operators. The model results also indicate that cost per passenger carried for longer, articulated buses is greater than for shorter, conventional vehicles. These findings are important considerations for the design of the industry and its regulatory framework.


Permission to publish the abstract has been given by Elsevier, copyright remains with them.


Transportation Research Part A Home Page: