Empirical Study On The Economies Of Scale And The Economies Of Density Of Chinese Railways Based On The Cost Function

The railways transportation plays an important role in the development process of the state and society.It is the main artery of the national economy and social development.With the scale of investment and line mileage increasing in Chinese Railways,the scale of the railways network and construction have been changing largely.However,in recent ten years,data of the operation and financial of Chinese Railways show that the liability of the railways has been serious and operating costs increased.Expanding the scale of high-speed railways network was the representative of the great leap forward growth in railways.How this great leap will affect the micro efficiency of Chinese Railways is worth thinking and verifying.The economies of scale and the economies of density of railways are two important indexes to evaluate the technical and economic characteristics and development efficiency of railways transportation industry.Therefore,it is of great theoretical and practical significance to study the economies of scale and the economies of density in railways development.In this paper,the C-D cost function and the translog cost function were used to study and measure the impact of the economies of scale and the economies of density and railways operation speed on the development of Chinese Railways.Firstly,the paper studied the economies of scale and the economies of density of the three stages which was 1953-2015,1953-1995,1996-2015 as well as the economies of speed of scale and economies of density by using C-D cost function during the 1953-1995 and 1996-2015.Then,in order to make up for the insufficiency of C-D cost function,according to the availability of data,this paper also made a further study on the economies of scale and the economies of density in two stages by using the translog cost function.In the first stage,the economies of density of railways transportation was analyzed by using the usual translog cost function with the indexes data of Chinese Railways in 1953-2015.In the second stage,based on the model in the first stage,the translog cost function model with the variable of mileage was established,and the economies of scale and the economies of density of railway transportation in 1953-2015 are studied.In the translog cost function model,the Seemingly Unrelated Regression model was used to solve the model and the annual economies of scale and the economies of density of railways transportation have been calculated.The conclusions with C-D cost functions are:(1)The economies of scale of Chinese Railways is under 1 during 1996-2015,which showed not economical.(2)The Chinese Railways throughout the development process has the economies of scale.(3)The economies of speed of scale presented economical during 1953-1995 but during the 1996-2015,it was opposite.Namely,the total cost of rail transport was rising with the speed of operation rising mainly caused by the large-scale high-speed rail operation.The conclusions with the translog cost function are:(1)The economies of the scale began to decline from 2008,and the economy of the scale value began to be under 1 until 2012,which has presented that with the high-speed rail as the representative of the rapid increase in the railway business mileage,the full cost of railway operations showed rapid growth trend.(2)But the development stage was still showing the economies of the density.At the same time,the consistency of the conclusions of the C-D cost function and the translog cost function model has been got.