A further note on the structure of gas distribution costs in urban areas

Abstract

This note re-examines the issue of functional form selection in estimating the relationship between gas distribution costs and market and density variables. The study by Guldmann (1983), where only linear and log-linear forms were considered, is expanded by using a general functional form based on the Box-Cox transformation. The maximum-likelihood estimated forms turn out to be different from the log-linear ones previously selected, and their implications for economies of scale and density are discussed.