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Cost Efficiency Measurement in Postal Delivery Networks

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Author Info

  • Massimo Filippini

    ()
    (Department of Economics, University of Lugano; ETH, Zurich, Switzerland)

  • Martin Koller

    ()
    (ETH, Zurich, Switzerland)

Abstract

The purpose of this study is to analyze the level of cost efficiency of Swiss Post's postal delivery units to enable policy makers' as well as Swiss Post to decide on the reactions to market changes. In particular, we use different panel data models to assess cost efficiency in these units to account for unobserved heterogeneity. The results from applying Mundlak's formulation to the Pooled stochastic frontier model provides evidence that this model is not affected by a heterogeneity bias and that the cost efficiency values lie within a lower and upper bound of the other recent and standard econometric frontier models. Overall, the analysis shows that assumptions on unobserved heterogeneity are crucial and that results of econometric cost efficiency measurement models have to be interpreted with corresponding caution.

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Bibliographic Info

Paper provided by USI Università della Svizzera italiana in its series Quaderni della facoltà di Scienze economiche dell'Università di Lugano with number 1206.

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Length: 25 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:lug:wpaper:1206

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Web page: https://www.bul.sbu.usi.ch

Related research

Keywords: cost efficiency; stochastic frontier models; unobserved heterogeneity; Mundlak; postal delivery network;

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References

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  1. Massimo FILIPPINI & Martin KOLLER, 2012. "Economies Of Scale And Scope In Postal Outlets Under Consideration Of Unobserved Heterogeneity," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 83(4), pages 435-443, December.
  2. Johnes, Geraint & Johnes, Jill, 2009. "Higher education institutions' costs and efficiency: Taking the decomposition a further step," Economics of Education Review, Elsevier, vol. 28(1), pages 107-113, February.
  3. Mehdi Farsi & Massimo Filippini, 2008. "An Analysis of Cost-Efficiency in Swiss Multi-utilities," CEPE Working paper series 08-60, CEPE Center for Energy Policy and Economics, ETH Zurich.
  4. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  5. Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2008. "Economies of Scale and Scope in Multi-Utilities," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 123-144.
  6. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
  7. Sergio PERELMAN & Pierre PESTIEAU, 1994. "A Comparative Performance Study of Postal Services: A Productive Efficiency Approach," Annales d'Economie et de Statistique, ENSAE, issue 33, pages 187-202.
  8. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
  9. Mehdi Farsi & Massimo Filippini & William Greene, 2004. "Efficiency Measurement in Network Industries: Application to the Swiss Railway Companies," CEPE Working paper series 04-32, CEPE Center for Energy Policy and Economics, ETH Zurich.
  10. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August.
  11. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  12. Martin Buser & Christian Jaag & Urs Trinkner, 2007. "Economics of Post Office Networks: Strategic Issues and the Impact on Mail Demand," Working Papers 0008, Swiss Economics, revised Dec 2007.
  13. 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.
  14. Waldman, Donald M., 1982. "A stationary point for the stochastic frontier likelihood," Journal of Econometrics, Elsevier, vol. 18(2), pages 275-279, February.
  15. Astrid Cullmann & Mehdi Farsi & Massimo Filippini, 2012. "Unobserved Heterogeneity and Efficiency Measurement in Public Transport," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 46(1), pages 51-66, January.
  16. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
  17. Massimo Filippini & Marika Zola, 2005. "Economies of scale and cost efficiency in the postal services: empirical evidence from Switzerland," Applied Economics Letters, Taylor & Francis Journals, vol. 12(7), pages 437-441.
  18. Mehdi Farsi & Massimo Filippini & Michael Kuenzle, 2005. "Unobserved heterogeneity in stochastic cost frontier models: an application to Swiss nursing homes," Applied Economics, Taylor & Francis Journals, vol. 37(18), pages 2127-2141.
  19. Jeffrey M. Wooldridge, 2001. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262232197, January.
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