Recent experiences with urban mass transit systems in North American cities indicate improved efficiency of operation through better co-ordination of mass transit system components. In particular, efficiencies have been improved through innovations in the collection-distribution of transit passengers with schemes such as dial-a-bus, park-and-ride and kiss-and-ride. This work develops an approach to study the economic efficiency of collection distribution systems in terms of the basic system variables such as land use, technological and travellers' characteristics as well as the system cost structure. In this investigation, various measures of system economic efficiency are determined, and recent observations from collection-distribution system operations in North America are incorporated. The sensitivity of system economic efficiency with respect to the system variables is also investigated. The approach developed in this research and resulting findings are applied to a case study area — the Nepean Township. This study results in an approach to study the collection-distribution system economic efficiency as well as initial findings on the subject. The approach developed allows for future refinements, as well as applications in the study of economic efficiencies of entire mass transit systems.