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Costs and efficiency of highway concessionaires: a survey of Italian operators

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  • Massiani, Jerome
  • Ragazzi, Giorgio

Abstract

Measuring the productivity of highway concessionaires is very relevant, especially when a price cap regulation is applied where tariff increases are based on expected improvements of productivity. Output may be measured in terms of traffic or network length, or a combination of both, while quality of service should ideally be accounted for. To measure productivity we consider only operating costs, as amortization and financial costs depend upon the original highway design and historical costs. A cross section analysis of the Italian concessionaires shows that: 1) operating costs depend on both traffic and capacity; 2) economies of scale are relevant but their estimate is very sensitive to the model specification; 3) there are large differences in efficiency among operators, indicating that there could be significant room for yardstick competition. We subsequently consider the main economic data regarding the major Italian concessionaire (Autostrade spa) over two decades. Revenues increased greatly, even more than traffic, while operating costs remained substantially stable in real terms, as the automation of toll collection allowed the company to reduce the number of collectors by almost half. Finally, a comparison between Italian and French concessionaires shows that the latter have much lower operating costs, which cannot be entirely explained by economies of scale or lower personnel costs.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36993.

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Date of creation: 2008
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Handle: RePEc:pra:mprapa:36993

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Keywords: Highway; Regulation; Productivity; Price-cap;

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  1. Luigi Benfratello & Alberto Iozzi & Paola Valbonesi, 2005. "Privatisation, regulation and productivity in the Italian motorway industry," "Marco Fanno" Working Papers 0002, Dipartimento di Scienze Economiche "Marco Fanno".
  2. Heike Link, 2003. "Estimates of marginal infrastructure costs for different modes of transport," ERSA conference papers ersa03p75, European Regional Science Association.
  3. David Levinson & David Gillen, 1997. "The Full Cost of Intercity Highway Transportation," Working Papers 199704, University of Minnesota: Nexus Research Group.
  4. 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.
  5. Link, Heike & Nilsson, Jan-Eric, 2005. "Infrastructure," Research in Transportation Economics, Elsevier, vol. 14(1), pages 49-83, January.
  6. Giorgio Ragazzi, 2004. "Politiche per la regolamentazione del settore autostradale e il finanziamento delle infrastrutture," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2004(4).
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