 represent labor, and let Z represent any other purchased parts and services. The production function of a firm that operates a single-output network is defined by Q=F(N, L, X, Y, Z). A production function represents the most efficient use of the inputs given a partic- ular technology. Accordingly, the network production function shows the tradeoffs between nodes, links, and the other inputs. The network production function describes how different links applied to a particular set of nodes affect output. Because the production function depends on the sets of nodes and links, the network's configuration matters, not just the number of nodes or links. The various alternative inputs in a network can refer to the types of switches at nodes or the types of lines in the links, such as copper, coaxial cable, and fiber optics. The complex engineering decisions about technologies, software, and network design thus underlie the network production function. a. Natural Gas Transmission Interestingly, Hollis Chenery's classic illustration of an engineering production function was for a network, namely pipeline transportation of natural gas. Inter- state natural gas transmission pipelines form networks through the United States. Pipelines, the links of the network, are generally made of welded steel up to 48 inches in diameter, with compressor stations located along the length of the lines (Gallick 1993). The nodes of the natural gas pipeline system are the supply points, the delivery points, and interconnections within the network. The service of the system is its natural transmission rate in terms of millions of cubic feet of gas per day. Consider the transmission rate of a single link as a proxy for a more complex web of lines. Suppose that there are a single supply node and a single demand node located one unit of distance apart. A unit of distance might equal 1,000 miles. The capacity of the pipeline depends on the specific gravity of the natural gas, its tem- perature in the pipeline, the number of compressor stations al