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Diversification strategies and scope economies: evidence from a sample of Italian regional bus transport providers

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Abstract:

A growing number of Local Public Transport (LPT) companies diversify their production lines by providing a large set of services. We investigate the cost structure of a sample of LPT companies operating in Italy and assess the presence and the magnitude of scope economies. We split the whole sample of firms according to their diversification strategy: private firms, mainly diversifying in competitive transport related services and public firms providing nontransport services in regulated markets. Scope economies appear sizeable for both groups but higher for firms pursuing a transport related strategy, suggesting caution in the multiutility development pursued by public LPT firms in Italy.

Keywords: L25; L33; L50; L92; cost function; diversification; scope economies; transport companies

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036846.2011.568399

Affiliations: 1: Dipartimento di Economia Cognetti,University of Turin, Via Po 53Torino 10124, Italy 2: Dipartimento di Scienze Economiche G. Prato,University of Turin, Torino 10124, Italy

Publication date: August 1, 2012

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