Once again, the costs of urban rapid transit

This paper re-examines the question of short-run economies in the provision of rapid-rail transit. In order to satisfy the theoretical requisite that all observations show costs no less than the theoretical minimum implies by a cost function, a frontier cost function is estimated here. The results indicate decreasing returns for all properties in the sample, a change from previous results. There appears to be only a small amount of technical inefficiency in the industry. The implications for marginal-cost pricing of these services is also discussed in the absence of externalities.