Advanced Search
MyIDEAS: Login to save this paper or follow this series

Long Run Properties of Technical Efficiency in the U.S. Airline Industry

Contents:

Author Info

  • Ila M. Semenick Alam
  • Robin C. Sickles

Abstract

This paper takes an innovative approach to test the relationship between technical efficiency and the market structure hypothesis which states that competitive pressure enhances relative efficiency. DEA and FDH time series of technical efficiency scores, for a panel of 11 US airlines observed quarterly during 1970-1990, are examined for cointegration and convergence. For almost all firm pairs (>90% for both efficiency measures), the null hypothesis of cointegration cannot be rejected; meanwhile, the null of no cointegration is rejected for approximately one-third of the firm pairs. Furthermore, convergence tests document less dispersion in firm performance over time. These results indicate that the scores move together and, in fact, the firms are becoming more alike one another in terms of efficiency. ZUSAMMENFASSUNG - (Langfristige Eigenschaften der technischen Effizienz in der US-Luftfahrtindustrie) In diesem Beitrag wird ein innovativer Ansatz entwickelt, um die Beziehung zwischen technischer Effizienz und der Marktstrukturhypothese zu überprüfen, die besagt, daß Wettbewerbsdruck die relative Effizienz erhöht. Die DEA- und FDH-Zeitreihen der technischen Effizienz für ein Panel-Datensatz von 11 US-Fluggesellschaften, die während der Periode 1970 bis 1990 beobachtet wurden, werden im Hinblick auf Kointegration und Konvergenz analysiert. Für nahezu alle Unternehmenspaare (mehr als 90% bei beiden Effizienzmaßen) kann die Nullhypothese der Kointegration nicht zurückgewiesen werden, wo hingegen die Nullhypothese, daß keine Kointegration vorliegt, für etwa ein Drittel der Unternehmenspaare zurückgewiesen wird. Außerdem zeigt der Konvergenztest, daß die Streuung des Unternehmenserfolgs im Zeitablauf abnimmt. Die Ergebnisse deuten darauf hin, daß die Effizienzwerte sich auf einander zu bewegen und daß in der Tat, die Unternehmen im Hinblick auf Effizienz sich immer ähnlicher werden.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://skylla.wz-berlin.de/pdf/1997/iv97-25.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 97-25.

as in new window
Length: 19 pages
Date of creation: Oct 1997
Date of revision:
Handle: RePEc:wzb:wzebiv:fsiv97-25

Contact details of provider:
Postal: Reichpietschufer 50, 10785 Berlin, Germany
Phone: (++49)(30) 25491-441
Fax: (++49)(30) 25491-442
Email:
Web page: http://www.wzb.eu/mp/wiw/default.en.htm
More information through EDIRC

Related research

Keywords:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Yin-Wong Cheung & Francis X. Diebold, 1993. "On maximum-likelihood estimation of the differencing parameter of fractionally integrated noise with unknown mean," Working Papers 93-5, Federal Reserve Bank of Philadelphia.
  2. Shin, Yongcheol, 1994. "A Residual-Based Test of the Null of Cointegration Against the Alternative of No Cointegration," Econometric Theory, Cambridge University Press, vol. 10(01), pages 91-115, March.
  3. Reifschneider, David & Stevenson, Rodney, 1991. "Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 715-23, August.
  4. Atkinson, Scott E & Cornwell, Christopher, 1994. "Parametric Estimation of Technical and Allocative Inefficiency with Panel Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 231-43, February.
  5. Allen N. Berger & Timothy H. Hannan, 1998. "The Efficiency Cost Of Market Power In The Banking Industry: A Test Of The "Quiet Life" And Related Hypotheses," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 454-465, August.
  6. TULKENS, Henry & VANDEN EECKAUT, Philippe, 1993. "Non-Parametric Efficiency, Progress and Regress Measures for Panel Data : Methodological Aspects," CORE Discussion Papers 1993016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  8. Button, Kenneth J & Weyman-Jones, Thomas G, 1992. "Ownership Structure, Institutional Organization and Measured X-Efficiency," American Economic Review, American Economic Association, vol. 82(2), pages 439-45, May.
  9. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
  10. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
  11. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
  12. Sickles, Robin C., 1985. "A nonlinear multivariate error components analysis of technology and specific factor productivity growth with an application to the U.S. Airlines," Journal of Econometrics, Elsevier, vol. 27(1), pages 61-78, January.
  13. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March.
  14. Singal, Vijay, 1996. "Airline Mergers and Competition: An Integration of Stock and Product Price Effects," The Journal of Business, University of Chicago Press, vol. 69(2), pages 233-68, April.
  15. Seiford, Lawrence M. & Thrall, Robert M., 1990. "Recent developments in DEA : The mathematical programming approach to frontier analysis," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 7-38.
  16. repec:cup:etheor:v:10:y:1994:i:1:p:95-115 is not listed on IDEAS
  17. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990. "Production frontiers with cross-sectional and time-series variation in efficiency levels," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 185-200.
  18. Baltagi, Badi H & Griffin, James M & Rich, Daniel P, 1995. "Airline Deregulation: The Cost Pieces of the Puzzle," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 245-60, February.
  19. Good, David H. & Nadiri, M. Ishaq & Sickles, Robin C., 1989. "The Structure Of Production, Technical Change And Efficiency In A Multiproduct Industry: An Application To U.S. Airlines," Working Papers 89-14, C.V. Starr Center for Applied Economics, New York University.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wzb:wzebiv:fsiv97-25. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jennifer Rontganger).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.