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Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

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the independent variables in his estimation equations, <strong>for</strong> he was at-<br />

tempting to determine the effects of size and region on cost. Never-<br />

theless, using only car miles and carloads (the latter deflated by<br />

tae <strong>for</strong>mer) seems a tremendous oversimplification of cost-determining<br />

factors. Even Botts himself, in a different article (to be discussed<br />

below), used a much more disaggregative approach and many more explan-<br />

atory variables. Borts' real contribution would seem to lie in his<br />

use of covariance analysis in the study of costs. This is a statis-<br />

tical technique that permits investigation Of the effects on regres-<br />

sion equations of various categorizations of the data. It is particu-<br />

larly useful when comparisons between categories is desired but the<br />

number of sample observations is small. 28<br />

The only estimation of rail production functions to be found in<br />

the economics literature is the work of Borts. 29 His study was de-<br />

signed to determine whether increasing returns existed in the rail-<br />

way industry. A model of production was specified <strong>for</strong> two processes<br />

in railway technology, and a production function was estimated from<br />

cross --section, data <strong>for</strong> each process.<br />

,<br />

It wah 4poLneblzed that railway technology consisted of the si-<br />

multaneous operation of three distinct processes which were physically<br />

connected. The three processes were loading of cargo cars, switching<br />

of cargo cars, and the transfer of assembled trains between terminals<br />

(linehaul). Because a large proportion of loading activity was car-<br />

ried on by other than transport firms, models of production relations<br />

were constructed <strong>for</strong> the switching and linehaul processes only.<br />

'1<br />

J.

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