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Regulatory and environmental effects on public transit efficiency: a mixed DEA-SFA approach

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  • Beniamina Margari

    ()

  • Fabrizio Erbetta

    ()

  • Carmelo Petraglia

    ()

  • Massimiliano Piacenza

    ()

Abstract

The aim of this paper is to account for the impact of statistical noise and exogenous regulatory and environmental factors on the efficiency of public transit systems in a DEA-based framework. To this end, we implement a three-stage DEA-SFA mixed approach based on Fried et al. (2002) using a 1993-1999 panel of 42 Italian public transit companies. This allows us to decompose input-specific DEA inefficiency measures into three components: exogenous effects, pure managerial inefficiency, and statistical noise. First, the initial evaluation of producer performance is carried out using conventional variable returns to scale DEA (Banker et al., 1984). Second, a SFA approach (Battese and Coelli, 1992) is used to regress single input slacks on subsidies regulation (cost-plus versus fixed-price contracts) and a set of environmental variables including network speed and user density. Finally, third stage re-runs DEA on inputs purged of both exogenous effects and statistical noise. Results are such that adjusting for the type of regulatory scheme, environmental conditions, and statistical noise increases average efficiency in the industry and reduces dispersion among firms. Furthermore, the implementation of fixed-price subsidies is found to enhance efficiency in the usage of “drivers” and “materials and services” inputs. Such a result sheds some light on the determinants of input-specific efficiency differentials in the industry, improving the existing evidence on mean overall cost efficiency (e.g. Gagnepain e Ivaldi, 2002; Piacenza, 2006). As a policy implication, it is confirmed the relevance of regula tion aimed at replacing cost-plus subsidization mechanisms with high-powered incentive contracts as well as improving operating conditions of public transport networks.

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Bibliographic Info

Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 32 (2007)
Issue (Month): 2 (October)
Pages: 131-151

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Handle: RePEc:kap:regeco:v:32:y:2007:i:2:p:131-151

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Web page: http://www.springerlink.com/link.asp?id=100298

Related research

Keywords: Public transit systemsm; Regulation; Environmental factors; Managerial skills; Frontier analysis (DEA; SFA); C44; D21; L50; L92; R41;

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References

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Citations

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Cited by:
  1. Axel Gautier & Anne Yvrande-Billon, 2013. "Contract Renewal as an Incentive Device. An Application to the French Urban Public Transport Sector," Review of Economics and Institutions, Università di Perugia, vol. 4(1).
  2. Andrea Boitani & Marcella Nicolini & Carlo Scarpa, 2013. "Do competition and ownership matter? Evidence from local public transport in Europe," Applied Economics, Taylor & Francis Journals, vol. 45(11), pages 1419-1434, April.
  3. Gwilliam, Ken, 2008. "A review of issues in transit economics," Research in Transportation Economics, Elsevier, vol. 23(1), pages 4-22, January.
  4. Chen, Kaihua, 2014. "Weighted Additive DEA Models Associated with Dataset Standardization Techniques," MPRA Paper 55072, University Library of Munich, Germany.
  5. Cambini Carlo & Filippini Massimo & Piacenza Massimiliano & Vannoni Davide, 2011. "Corporatization and Firm Performance: Evidence from Publicly-Provided Local Utilities," Review of Law & Economics, De Gruyter, vol. 7(1), pages 191-213, July.
  6. Simona Bigerna & Paolo Polinori, 2008. "Ambiente operativo ed efficienza nel settore del Trasporto Pubblico Locale in Italia," Quaderni del Dipartimento di Economia, Finanza e Statistica 59/2008, Università di Perugia, Dipartimento Economia, Finanza e Statistica.
  7. Wen-Jen Tsay & Cliff J. Huang & Tsu-Tan Fu & I-Lin Ho, 2009. "Maximum Likelihood Estimation of Censored Stochastic Frontier Models: An Application to the Three-Stage DEA Method," IEAS Working Paper : academic research 09-A003, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  8. Chiou, Yu-Chiun & Lan, Lawrence W. & Yen, Barbara T.H., 2010. "A joint measurement of efficiency and effectiveness for non-storable commodities: Integrated data envelopment analysis approaches," European Journal of Operational Research, Elsevier, vol. 201(2), pages 477-489, March.
  9. Bracalente, Bruno & Polinori, Paolo, 2010. "L’efficienza tecnico-economica dei servizi pubblici locali: i casi delle farmacie comunali e dei servizi di igiene urbana
    [Technical And Economic Efficiency Of Local Public Services: The Cases Of
    ," MPRA Paper 34455, University Library of Munich, Germany.
  10. Amaral, Miguel, 2008. "Public vs private management of public utilities - The case of urban public transport in Europe," Research in Transportation Economics, Elsevier, vol. 22(1), pages 85-90, January.
  11. Angela Stefania Bergantino & Enrico Musso, 2011. "The role of external factors versus managerial ability in determining seaports’ relative efficiency: An input-by-input analysis through a multi-step approach on a panel of Southern European ports," Maritime Economics and Logistics, Palgrave Macmillan, vol. 13(2), pages 121-141, June.
  12. Matthias Walter, 2011. "Some Determinants of Cost Efficiency in German Public Transport," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 45(1), pages 1-20, January.
  13. Chiou, Yu-Chiun & Lan, Lawrence W. & Yen, Barbara T.H., 2012. "Route-based data envelopment analysis models," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 415-425.
  14. Simona Sanguineti & Alessio Tei, 2012. "L’efficienza delle aziende di Trasporto Pubblico Locale: confronto tra le maggiori realtà italiane," ECONOMIA E DIRITTO DEL TERZIARIO, FrancoAngeli Editore, vol. 2012(3), pages 359-377.

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