| Abstract: | This paper develops a neoclassical cost function for demand responsive transit (DRT) system and uses it to test the economies of scale hypothesis. The results show economies of scale and further show that the economies can be explained by speed, local and state subsidies, utilization of seating capacity, fleet utilization and an increase in the number of professionals. Comparison of DRT and bus transit results identifies patterns in policy variables whose effects on cost are the same across modes. |
