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.