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Evaluating Efficiency and Productivity Growth in Passenger Transportation Industry: Application of Stochastic Frontier Function (in Persian)

Author

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  • Norani-Azad, Samaneh

    (Assistant Professor, Department of Economics, Payame Noor University, Tehran, Iran.)

  • Khodadad-Kashi, Farhad

    (Professor, Department of Economics, Payame Noor University, Tehran, Iran.)

Abstract

The main purpose of this study is to measure the productivity and efficiency of Iran’s airline industry. To meet this ends, the data of 12 companies in the airline industry were used over the period 2011-2018. Also, this article sought to measure total factor productivity, technological progress, scale efficiency, and changes in technical efficiency by using a stochastic frontier and parametric approaches. The results show that the highest total factor productivity and change efficiency occurred in 2014. Moreover, among the effective factors on productivity, the change efficiency and economies of scale have the greatest impact. Although some of the companies exhausted all the scale economies, some still have not done that yet. Therefore, by increasing product scale and air fleet capacity, economies of scale can be exploited further. In addition, the results imply that increasing the market share of each company leads to a reduction of inefficiency in this industry. Thus market share being aligned with technological progress, scale efficiency and change efficiency are the determining factors in enhancing total factor productivity and efficiency in this industry.

Suggested Citation

  • Norani-Azad, Samaneh & Khodadad-Kashi, Farhad, 2019. "Evaluating Efficiency and Productivity Growth in Passenger Transportation Industry: Application of Stochastic Frontier Function (in Persian)," The Journal of Planning and Budgeting (٠صلنامه برنامه ریزی Ùˆ بودجه), Institute for Management and Planning studies, vol. 24(2), pages 31-58, September.
    • Handle: RePEc:auv:jipbud:v:24:y:2019:i:2:p:31-58
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    More about this item

    Keywords

    Total Factor Productivity; Scale Efficiency; Technical Efficiency; Technological Progress Rate; Airline Transportation; Growth Accounting; Stochastic Frontier.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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