British Railway Cost Functions and Productivity Growth, 1900-1912

This paper uses statistical cost estimation techniques to consider the cost structure and productivity performance of the British railway industry between 1900 and 1912. Two data sets are employed. The evidence shows more-or-less constant returns to scale with respect to firm size and so few cost reduction benefits to be achieved by amalgamation per se. Evidence on economies of density is less clear, partly because of limitations to the data available. Econometric estimates of modest productivity growth are supplemented by conventional index number estimates of total factor productivity change which permit cross-company comparisons to be made.