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Productive Efficiency And Regulatory Reform: The Case Of Vehicle Inspection Services

  • FRANCESC TRILLAS

    (Universitat Autònoma de Barcelona)

  • DANIEL MONTOLIO

    (Universitat de Barcelona)

  • NÉSTOR DUCH

    (Universitat de Barcelona)

Measuring productive efficiency provides information on the likely effects of regulatory reform. We present a Data Envelopment Analysis (DEA) of a sample of 38 vehicle inspection units under a concession regime with a homogeneous level of quality, which is enforced by a regional regulator, between the years 2000 and 2004. The differences in efficiency scores show the potential technical efficiency benefits of introducing some form of incentive regulation or of progressing towards liberalization. We also compute scale efficiency scores, showing that only units in territories with a very low population density operate at a sub-optimal scale. Among those that operate at an optimal scale, there are significant differences in size; the largest ones operate in territories with the highest population density. This suggests that the introduction of new units into the most densely populated territories (a likely effect of some form of liberalization) would not be detrimental in terms of scale efficiency. The firm’s identity seems to be a determinant of the distance to the efficiency frontier. Finally, we show that between 2002 and 2004, a period of high regulatory uncertainty in the sample’s region, technical change was almost zero. Regulatory reform should take due account of scale and diversification effects, while at the same time avoiding regulatory uncertainty.

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Article provided by Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica in its journal Revista de Economía Aplicada.

Volume (Year): 19 (2011)
Issue (Month): 1 (Spring)
Pages: 33-59

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Handle: RePEc:rev:reveca:v:19:y:2011:i:1:p:33-59
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  1. Thomas N. Hubbard, 1997. "Using Inspection And Maintenance Programs To Regulate Vehicle Emissions," Contemporary Economic Policy, Western Economic Association International, vol. 15(2), pages 52-62, 04.
  2. Glass, J C & McKillop, Donal G & Hyndman, N, 1995. "Efficiency in the Provision of University Teaching and Research: An Empirical Analysis of UK Universities," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(1), pages 61-72, Jan.-Marc.
  3. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
  4. E. Grifell-Tatjé & C. Lovell, 1999. "A generalized Malmquist productivity index," TOP- An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 7(1), pages 81-101, June.
  5. Dusansky, Richard & Wilson, Paul W, 1994. "Technical Efficiency in the Decentralized Care of the Developmentally Disabled," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 340-45, May.
  6. Coelli, T J, 1996. "Measurement of Total Factor Productivity Growth and Biases in Technological Change in Western Australian Agriculture," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(1), pages 77-91, Jan.-Feb..
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