Hedonic Cost Functions for the 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.

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Cite this paper

@inproceedings{Spady2011HedonicCF, title={Hedonic Cost Functions for the Trucking Industry}, author={Richard H. Spady and Ann F. Friedlaender and Thomas Bailey and Karen Hladik}, year={2011} }