The sign of the exponent of output Q in eqn (5) indicates
that long-run marginal costs decline with output. This is
an indication of long-run economies of scale in the
provision of fixed-rail rapid transit service and is a basic
conclusion of our study.
The magnitude of the scale economies is reasonably
small. The exponent of output indicates that a ten
per cent increase in design output would only cause a 2.4
per cent decrease in the marginal cost of a vehicle-mile of
output though, on the demand side, scale may be important
in providing attractive, direct service.