Sources of Productivity Increases in the U.S. Passenger Airline Industry.

The purpose of this paper is to estimate cost functions for the U.S. passenger airline industry in order to determine the sources of recent observed productivity, increases. A cost function is derived from the Cobb-Douglas production function, and the parameters of that reduced form equation are estimated. Special attention is given to effect of technology on costs. In general, it was found that there seem to be no scale economies present in the production of available seat miles, but that the level of technology has a substantial impact on cost and productivity. [ABSTRACT FROM AUTHOR]