Economies of scale in the road haulage system: Some evidence from the Nigerian economy

Economies of scale are said to exist if the long run average costs decline as output scales increase. The traditional view on economies of scale in the road haulage industry is that costs are constant irrespective of output scales. This view is supported by a number of studies in various countries. However, some recent studies in a number of countries also suggest that scale economies exist in the road haulage industry. This paper reports the results of an empirical investigation in the Nigerian economy. Our analyses indicate that only very weak or no significant overall scale economies exist in the Nigerian trucking industry. The study also throws some light on the minimum optimum scale, and the economies of vehicle size.