The Quiet Transport Revolution: Returns to Scale, Scope and Network Density in Norway`s Nineteenth-Century Sailing Fleet

Interpreting the role of expanding transport in overall production growth in the nineteenth century is still hampered by our lack of understanding of how much and when ocean shipping costs began to fall. This paper exploits new output and freight rate data for one of the world`s largest merchant fleets, the Norwegian, 1830-66. We argue that the price of an average shipped ton-mile was subject to three sources of returns to scale. We test for the impact of a changing composition of produced output (the `composition effect`) to account for economies of scope and offer an alternative index for the price of the average ton-mile that shows a strongly falling trend for the entire period. We then turn to the effect that increasing maturity of new routes had on prices, thus analysing returns to an increased network density finding strong evidence for their existence. Finally, we investigate the importance of internal scale economies in firm and ship size based on a cost survey conducted in 1867-70.