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The Impact of Privatisation on the Efficiency of Train Operation in Britain

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Author Info
Luisa Affuso
Alvaro Angeriz
Michael Pollitt

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Abstract

Twenty-five train operating companies (TOCs) were created between 1994-1997, as part of the restructuring process of the railway industry in Great Britain. The TOCs operate monopoly franchises for the provision of passenger rail services over certain routes - some of which continue to receive government subsidies. This paper investigates how the efficiency of these train operating companies evolved prior to the October 2000 Hatfield crash (which caused significant disruption to the network) using data envelopment analysis and stochastic frontier analysis. Our data allows us to look at the relative efficiency and productivity through the privatisation, to control the efficiency scores for environmental data and to correlate these results with safety and quality indicators. The analysis sheds some light on the successes and failures of the UK’s most controversial privatisation to date.

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Paper provided by Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research in its series Working Papers with number 28.

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Date of creation: Apr 2009
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Handle: RePEc:cgs:wpaper:28

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Related research
Keywords: Railways; Comparative Efficiency; Data Envelopment Analysis; Stochastic Frontier Analyisis; Malmquist Productivity Index; Train Operating Companies; Privatisation;

Find related papers by JEL classification:
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
M48 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Government Policy and Regulation

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References listed on IDEAS
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  6. Michael G. Pollitt & Andrew S. J. Smith, 2002. "The restructuring and privatisation of British Rail: was it really that bad?," Fiscal Studies, Institute for Fiscal Studies, vol. 23(4), pages 463-502, December.
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  7. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June. [Downloadable!] (restricted)
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  11. Perelman, Sergio & Pestieau, Pierre, 1988. "Technical performance in public enterprises : A comparative study of railways and postal services," European Economic Review, Elsevier, vol. 32(2-3), pages 432-441, March. [Downloadable!] (restricted)
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