Economies of Scope in the Trucking Industry
* Questions:
- Economies of Scope
- Are large-scale, direct hauls cheaper and more profitable than individual hauls by small trucks?
- Are there cost advantages from operating direct and indirect hauls both?
* Empirical Findings
- An analysis of 105 trucking firms examined 4 distinct outputs.
- Short hauls with the partial loads
- Intermediate hauls with the partial loads
- Long hauls with the partial loads
- Hauls with entire loads
- Results
- SC = 1.576 for reasonably large firm
- SC = 0.104 for very large firms
- Interpretation
- Combining partial loads at the intermediate location lowers cost management difficulties with very large firms.