IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v42y2008i6p935-950.html
   My bibliography  Save this article

The effects of privatization on return to the dollar: A case study on technical efficiency, and price distortions of Taiwan's intercity bus services

Author

Listed:
  • Yu, Ming-Miin
  • Fan, Chih-Ku

Abstract

The purpose of this paper is to apply a hyperbolic graph efficiency approach to measure "return to the dollar" at the station-level of the Taiwan Motor Transport Company before and after privatization. The "return to the dollar" measure is decomposed into two components: a technical efficiency and allocative efficiency index. Price distortions are measured by allocative efficiency using data on observed costs and revenues, without requiring explicit information on prices. The decomposition results indicate that both technical and allocative efficiencies contribute to the growth of "return to the dollar", with the allocative component playing a more important role than the technical component. Perhaps in an attempt to cover the inefficiency-induced losses, both the public and private firms apparently resort to distorting relative output prices with respect to input prices, and the distortion is more pronounced in the private firm than in the public firm. A statistically significant increase in technical efficiency took place following privatization, implying that the private firm converted input resources into output more effectively than its predecessor.

Suggested Citation

  • Yu, Ming-Miin & Fan, Chih-Ku, 2008. "The effects of privatization on return to the dollar: A case study on technical efficiency, and price distortions of Taiwan's intercity bus services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(6), pages 935-950, July.
  • Handle: RePEc:eee:transa:v:42:y:2008:i:6:p:935-950
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965-8564(08)00052-9
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
    2. repec:adr:anecst:y:1999:i:54:p:06 is not listed on IDEAS
    3. Paul H. Malatesta & Kathryn L. DeWenter, 2001. "State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity," American Economic Review, American Economic Association, vol. 91(1), pages 320-334, March.
    4. Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. "The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-452, June.
    5. Bruno De Borger & Kristiaan Kerstens & Álvaro Costa, 2002. "Public transit performance: What does one learn from frontier studies?," Transport Reviews, Taylor & Francis Journals, vol. 22(1), pages 1-38, January.
    6. Kenneth Button & Peter Nijkamp & Hugo Priemus (ed.), 1998. "Transport Networks in Europe," Books, Edward Elgar Publishing, number 1246.
    7. William L. Megginson & Robert C. Nash & Jeffry Netter & Adam L. Schwartz, 2000. "The Long-Run Return to Investors in Share Issue Privatizations," Financial Management, Financial Management Association, vol. 29(1), Spring.
    8. Nolan, J. F. & Ritchie, P. C. & Rowcroft, J. E., 2002. "Identifying and measuring public policy goals: ISTEA and the US bus transit industry," Journal of Economic Behavior & Organization, Elsevier, vol. 48(3), pages 291-304, July.
    9. R. G. Chambers & Y. Chung & R. Färe, 1998. "Profit, Directional Distance Functions, and Nerlovian Efficiency," Journal of Optimization Theory and Applications, Springer, vol. 98(2), pages 351-364, August.
    10. Ming-Miin Yu & Chih-Ku Fan, 2006. "Measuring the Cost Effectiveness of Multimode Bus Transit in the Presence of Accident Risks," Transportation Planning and Technology, Taylor & Francis Journals, vol. 29(5), pages 383-407, July.
    11. Kristiaan Kerstens, 1999. "Decomposing Technical Efficiency and Effectiveness of French Urban Transport," Annals of Economics and Statistics, GENES, issue 54, pages 129-155.
    12. Narjess Boubakri & Jean-Claude Cosset, 1998. "The Financial and Operating Performance of Newly Privatized Firms: Evidence from Developing Countries," Journal of Finance, American Finance Association, vol. 53(3), pages 1081-1110, June.
    13. Chu, Xuehao & Fielding, Gordon J. & Lamar, Bruce W., 1992. "Measuring transit performance using data envelopment analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 26(3), pages 223-230, May.
    14. Henry-Jean GATHON, 1989. "Indicators Of Partial Productivity And Technical Efficiency In The European Urban Transit Sector," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 60(1), pages 43-60, January.
    15. Fare, Rolf & Grosskopf, Shawna & Zaim, Osman, 2002. "Hyperbolic efficiency and return to the dollar," European Journal of Operational Research, Elsevier, vol. 136(3), pages 671-679, February.
    16. Karlaftis, Matthew & McCarthy, Patrick, 1999. "The Effect of Privatization on Public Transit Costs," Journal of Regulatory Economics, Springer, vol. 16(1), pages 27-43, July.
    17. Jonathan Cowie & Darinka Asenova, 1999. "Organisation form, scale effects and efficiency in the British bus industry," Transportation, Springer, vol. 26(3), pages 231-248, August.
    18. Harper, Joel T., 2002. "The performance of privatized firms in the Czech Republic," Journal of Banking & Finance, Elsevier, vol. 26(4), pages 621-649, April.
    19. Ryoichi Sakano & Kofi Obeng & G. Azam, 1997. "Subsidies And Inefficiency: Stochastic Frontier Approach," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 113-127, July.
    20. Viton, Philip A., 1997. "Technical efficiency in multi-mode bus transit: A production frontier analysis," Transportation Research Part B: Methodological, Elsevier, vol. 31(1), pages 23-39, February.
    21. Dewenter, Kathryn L & Malatesta, Paul H, 1997. "Public Offerings of State-Owned and Privately-Owned Enterprises: An International Comparison," Journal of Finance, American Finance Association, vol. 52(4), pages 1659-1679, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Simona Sanguineti & Alessio Tei, 2012. "L?efficienza delle aziende di Trasporto Pubblico Locale: confronto tra le maggiori realt? italiane," ECONOMIA E DIRITTO DEL TERZIARIO, FrancoAngeli Editore, vol. 2012(3), pages 359-377.
    3. Kumbhakar, Subal C., 2011. "Estimation of production technology when the objective is to maximize return to the outlay," European Journal of Operational Research, Elsevier, vol. 208(2), pages 170-176, January.
    4. Walter, Matthias & Haunerland, Fabian & Moll, Robert, 2011. "Heavily regulated, but promising prospects: Entry in the German Express Coach Market," Transport Policy, Elsevier, vol. 18(2), pages 373-381, March.
    5. Subal Kumbhakar & Frank Asche & Ragnar Tveteras, 2013. "Estimation and decomposition of inefficiency when producers maximize return to the outlay: an application to Norwegian fishing trawlers," Journal of Productivity Analysis, Springer, vol. 40(3), pages 307-321, December.
    6. Pestana Barros, Carlos & Peypoch, Nicolas, 2010. "Productivity changes in Portuguese bus companies," Transport Policy, Elsevier, vol. 17(5), pages 295-302, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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".
    2. Harper, Joel T., 2002. "The performance of privatized firms in the Czech Republic," Journal of Banking & Finance, Elsevier, vol. 26(4), pages 621-649, April.
    3. Feng, Fang & Sun, Qian & Tong, Wilson H. S., 2004. "Do government-linked companies underperform?," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2461-2492, October.
    4. Seung‐Doo Choi & Inmoo Lee & William Megginson, 2010. "Do Privatization IPOs Outperform in the Long Run?," Financial Management, Financial Management Association International, vol. 39(1), pages 153-185, March.
    5. Sun, Qian & Tong, Wilson H. S., 2003. "China share issue privatization: the extent of its success," Journal of Financial Economics, Elsevier, vol. 70(2), pages 183-222, November.
    6. D'Souza, Juliet & Megginson, William L. & Ullah, Barkat & Wei, Zuobao, 2017. "Growth and growth obstacles in transition economies: Privatized versus de novo private firms," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 422-438.
    7. de Borger, Bruno & Kerstens, Kristiaan & Staat, Matthias, 2008. "Transit costs and cost efficiency: Bootstrapping non-parametric frontiers," Research in Transportation Economics, Elsevier, vol. 23(1), pages 53-64, January.
    8. repec:dau:papers:123456789/3860 is not listed on IDEAS
    9. Samet Güner & Erman Coşkun, 2016. "Determining the best performing benchmarks for transit routes with a multi-objective model: the implementation and a critique of the two-model approach," Public Transport, Springer, vol. 8(2), pages 205-224, September.
    10. O'Toole, Conor M. & Morgenroth, Edgar L.W. & Ha, Thuy T., 2016. "Investment efficiency, state-owned enterprises and privatisation: Evidence from Viet Nam in Transition," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 93-108.
    11. Gong, Stephen X.H. & Cullinane, Kevin & Firth, Michael, 2012. "The impact of airport and seaport privatization on efficiency and performance: A review of the international evidence and implications for developing countries," Transport Policy, Elsevier, vol. 24(C), pages 37-47.
    12. Hamdi Ben‐Nasr & Narjess Boubakri & Jean‐Claude Cosset, 2012. "The Political Determinants of the Cost of Equity: Evidence from Newly Privatized Firms," Journal of Accounting Research, Wiley Blackwell, vol. 50(3), pages 605-646, June.
    13. Wolf, Christian, 2009. "Does ownership matter? The performance and efficiency of State Oil vs. Private Oil (1987-2006)," Energy Policy, Elsevier, vol. 37(7), pages 2642-2652, July.
    14. Filippo Belloc, 2014. "Innovation in State-Owned Enterprises: Reconsidering the Conventional Wisdom," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(3), pages 821-848.
    15. Laura Cabeza García & Silvia Gómez Ansón, 2012. "What Drives the Operating Performance of Privatised Firms?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(1), pages 1-27, February.
    16. Ghosh, Saibal, 2008. "Does divestment matter for firm performance?: Evidence from the Indian experience," Economic Systems, Elsevier, vol. 32(4), pages 372-388, December.
    17. Christian Wolf & Michael G. Pollitt, 2008. "Privatising national oil companies: Assessing the impact on firm performance," Working Papers EPRG 0805, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    18. Mathur, Ike & Banchuenvijit, Wanrapee, 2007. "The effects of privatization on the performance of newly privatized firms in emerging markets," Emerging Markets Review, Elsevier, vol. 8(2), pages 134-146, May.
    19. Ben-Nasr, Hamdi, 2016. "Labor protection and government control: Evidence from privatized firms," Economic Modelling, Elsevier, vol. 52(PB), pages 485-498.
    20. Alberto Chong & Florencio de, 2003. "The Truth about Privatization in Latin America," Yale School of Management Working Papers ysm436, Yale School of Management.
    21. Boubakri, Narjess & Guedhami, Omrane & Kwok, Chuck C.Y. & Wang, He (Helen), 2019. "Is privatization a socially responsible reform?," Journal of Corporate Finance, Elsevier, vol. 56(C), pages 129-151.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:42:y:2008:i:6:p:935-950. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.