 may differ by origins and destinations, SO that system congestion varies between different parts of the network. With multiple servers of different capacities and optimal dispatch of calls through the network, the interactions between multiple traffic flows can be complex. Traffic is then unlikely to be additive, except perhaps for parts of the network. In any case, the effects of interactions between types of traffic can be represented by a general multiproduct cost function, C(Q1, The cost function is useful for examining tradeoffs between types of inputs. Suppose for purposes of illustration that N and L represent levels of capital invest- ment in nodes and links, respectively. Let PN and PL be the prices of these two forms The Design and Costs of Networks of capital equipment. Suppose that the network production function has a basic Cobb-Douglas form, Q=AN"Lb, where A is a constant and where a and b are productivity parameters. If a + b = 1, there are constant returns to scale. If a+b>1, there are increasing returns to scale, and if a + b < 1, there are decreasing returns to scale. The marginal product of investment in nodes is a ANa-1Lb and that of investment in links is b ANa Lb-1. The ratio of marginal products is called the marginal rate of technical substitution (MRTS). The MRTS reduces to MRTS= Cost minimization requires equating the marginal rate of technical substitution to the ratio of input prices: This is the input mix that equates the relative productivity of inputs to their relative purchase costs. Now, combine the network production function (16) and the efficiency condition (18) to obtain necessary inputs as a function of the output level: To obtain the network cost function, substitute these results into the expenditure levels, PNN+ PLL: Although expenditures depend on the efficient number of network elements, the cost function is a schedule based only on the final output level and input prices. For example, if a = b = 1/2, the network cost function is The configuration of the network is sens