Hedonic Cost Functions for the Regulated Trucking Industry
Volume: Volume 9, No. 1
Issue: Spring 1978
Pages: pp. 159-179
Authors: Richard H. Spady and Ann F. Friedlaender
Title: Hedonic Cost Functions for the Regulated Trucking Industry
Abstract: In industries where physical output varies with respect to attributes or qualities, it is important to take these differences into account in estimating cost functions. This paper presents a hedonic cost function that can be used to take output characteristics into account and applies it to the regulated trucking industry. It is found that failure to take output characteristics into account creates serious specification error and that inferences concerning economies of scale and factor demand differ substantially between the hedonic and nonhedonic formulation of the cost function.
JEL Classification
Microeconomics Theory of Production (0223)
Economics of Transportation (6150)