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Efficiency Measurement in Network Industries: Application to the Swiss Railway Companies

Author Info

  • Mehdi Farsi

    ()

  • Massimo Filippini

    ()

  • William Greene

    ()

Abstract

The persistence of increasingly high government subsidies in Switzerland’s railroads has led the federal and cantonal authorities to discussing the possibility of high-powered incentive contracts such as those based on cost efficiency benchmarking. Railways are however, characterized by a high degree of unobserved heterogeneity that could bias the efficiency estimates. This paper examines the performance of several panel data models to measure cost efficiency in network industries. The unobserved firm-specific effects and the resulting biases are studied through a comparative study of several stochastic frontier models, applied to a panel of 50 railway companies operating over a 13-year period. Copyright Springer Science+Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11149-005-2356-9
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Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 28 (2005)
Issue (Month): 1 (07)
Pages: 69-90

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Handle: RePEc:kap:regeco:v:28:y:2005:i:1:p:69-90
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100298

Keywords: cost efficiency; incentive regulation; railroads; scale economies;

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  14. Pedro Cantos & José Pastor & Lorenzo Serrano, 1999. "Productivity, efficiency and technical change in the European railways: A non-parametric approach," Transportation, Springer, vol. 26(4), pages 337-357, November.
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  16. Massimo Filippini & Paola Prioni, 2003. "The influence of ownership on the cost of bus service provision in Switzerland - an empirical illustration," Applied Economics, Taylor & Francis Journals, vol. 35(6), pages 683-690.
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