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The effect of mergers on efficiency and productivity of public transport services

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  • Odeck, James

Abstract

Merger is a process whereby two or more companies merge into one company to strengthen their market positions. Merger in the bus transport sector has been prevalent in Europe, and elsewhere, since the early 1990s. A question rarely addressed by researchers of transportation is the extent to which mergers lead to efficiency by which services are provided to the public. This is the substantive issue in this paper in which Norwegian data are used to assess the impact that mergers have on the performances of bus companies. The data cover the period 1995-2002; 1995-1998 are the pre-mergers years and the post-merger years are 1999-2002. The framework for the analyses is that of data envelopment analysis and the Malmquist productivity index (MPI) to investigate the impacts of mergers on efficiency and productivity growth, respectively. It is found that: (1) there is great potential for efficiency and productivity improvements in the bus industry; (2) mergers outperformed non-mergers as far as scale efficiency was concerned; and (3) the merger process led to productivity improvements in the post-merger periods for the reasons that merged companies utilized their scale economies to improve efficiencies while the non-mergers significantly became more technically innovative in order to be competitive. These results are an asset to the less-explored field of the impact of mergers in transportation.

Suggested Citation

  • Odeck, James, 2008. "The effect of mergers on efficiency and productivity of public transport services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(4), pages 696-708, May.
  • Handle: RePEc:eee:transa:v:42:y:2008:i:4:p:696-708
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    References listed on IDEAS

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    Cited by:

    1. Veeneman, Wijnand & Wilschut, Janneke & Urlings, Thijs & Blank, Jos & van de Velde, Didier, 2014. "Efficient frontier analysis of Dutch public transport tendering: A first analysis," Research in Transportation Economics, Elsevier, vol. 48(C), pages 101-108.
    2. António Lobo & António Couto, 2016. "Technical Efficiency of European Metro Systems: The Effects of Operational Management and Socioeconomic Environment," Networks and Spatial Economics, Springer, vol. 16(3), pages 723-742, September.
    3. Bouf, Dominique & Faivre d’Arcier, Bruno, 2015. "The looming crisis in French public transit," Transport Policy, Elsevier, vol. 42(C), pages 34-41.
    4. Cinzia Daraio & Marco Diana & Flavia Di Costa & Claudio Leporelli & Giorgio Matteucci & Alberto Nastasi, 2014. "Efficiency and effectiveness in the urban public transport sector: a critical review with directions for future research," DIAG Technical Reports 2014-14, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    5. George E. Halkos & Nickolaos G. Tzeremes, 2015. "Measuring Seaports' Productivity: A Malmquist Productivity Index Decomposition Approach," Journal of Transport Economics and Policy, University of Bath, vol. 49(2), pages 355-376, April.
    6. Karlaftis, Matthew G. & Tsamboulas, Dimitrios, 2012. "Efficiency measurement in public transport: Are findings specification sensitive?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 392-402.
    7. Caulfield, Brian & Bailey, Diarmuid & Mullarkey, Shane, 2013. "Using data envelopment analysis as a public transport project appraisal tool," Transport Policy, Elsevier, vol. 29(C), pages 74-85.
    8. Ahmed Ayadi & Sami Hammami, 2016. "Efficiency Measurement and Determinants of the Public Transport Industry in Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 7(2), pages 613-629, June.
    9. Rolim, Fernando & Brasileiro, Anísio & Santos, Enilson, 2010. "Competition in Brazilian bus and coach services - The results of recent competitive tendering processes," Research in Transportation Economics, Elsevier, vol. 29(1), pages 45-51.
    10. Kenta Tanaka and Shunsuke Managi, 2013. "Measuring Productivity Gains from Deregulation of the Japanese Urban Gas Industry," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    11. repec:eee:transa:v:106:y:2017:i:c:p:75-88 is not listed on IDEAS
    12. repec:spr:opsear:v:54:y:2017:i:4:d:10.1007_s12597-017-0303-z is not listed on IDEAS
    13. Zhang, Chunqin & Juan, Zhicai & Luo, Qingyu & Xiao, Guangnian, 2016. "Performance evaluation of public transit systems using a combined evaluation method," Transport Policy, Elsevier, vol. 45(C), pages 156-167.
    14. Holmgren, Johan, 2013. "The efficiency of public transport operations – An evaluation using stochastic frontier analysis," Research in Transportation Economics, Elsevier, vol. 39(1), pages 50-57.
    15. Pestana Barros, Carlos & Peypoch, Nicolas, 2010. "Productivity changes in Portuguese bus companies," Transport Policy, Elsevier, vol. 17(5), pages 295-302, September.
    16. Zhang, Chunqin & Juan, Zhicai & Xiao, Guangnian, 2015. "Do contractual practices affect technical efficiency? Evidence from public transport operators in China," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 80(C), pages 39-55.

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