Diversification strategies and scope economies: Evidence from a sample of Italian regional bus transport providers

A growing number of local public transport (LPT) companies diversify their production lines by providing a large set of services. We investigate the cost structure of a sample of LPT companies operating in Italy and assess the presence and the magnitude of scope economies. We split the whole sample of firms according to their diversification strategy: private firms, mainly diversifying in competitive transport-related services and public firms providing non-transport services in regulated markets. Scope economies appear sizeable for both groups but higher for firms pursuing a transport related strategy, suggesting caution in the multi-utility development pursued by public LPT firms in Italy.