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Costs and efficiency of highway concessionaires: a survey of Italian operators

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  • Massiani, Jerome
  • Ragazzi, Giorgio

Abstract

Measuring the productivity of highway concessionaires is very relevant, especially when a price cap regulation is applied where tariff increases are based on expected improvements of productivity. Output may be measured in terms of traffic or network length, or a combination of both, while quality of service should ideally be accounted for. To measure productivity we consider only operating costs, as amortization and financial costs depend upon the original highway design and historical costs. A cross section analysis of the Italian concessionaires shows that: 1) operating costs depend on both traffic and capacity; 2) economies of scale are relevant but their estimate is very sensitive to the model specification; 3) there are large differences in efficiency among operators, indicating that there could be significant room for yardstick competition. We subsequently consider the main economic data regarding the major Italian concessionaire (Autostrade spa) over two decades. Revenues increased greatly, even more than traffic, while operating costs remained substantially stable in real terms, as the automation of toll collection allowed the company to reduce the number of collectors by almost half. Finally, a comparison between Italian and French concessionaires shows that the latter have much lower operating costs, which cannot be entirely explained by economies of scale or lower personnel costs.

Suggested Citation

  • Massiani, Jerome & Ragazzi, Giorgio, 2008. "Costs and efficiency of highway concessionaires: a survey of Italian operators," MPRA Paper 36993, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36993
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    File URL: https://mpra.ub.uni-muenchen.de/36993/1/MPRA_paper_36993.pdf
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    References listed on IDEAS

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    1. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    2. David Levinson & David Gillen, 1997. "The Full Cost of Intercity Highway Transportation," Working Papers 199704, University of Minnesota: Nexus Research Group.
    3. Giorgio Ragazzi, 2004. "Politiche per la regolamentazione del settore autostradale e il finanziamento delle infrastrutture," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2004(4).
    4. Luigi Benfratello & Alberto Iozzi & Paola Valbonesi, 2009. "Technology and incentive regulation in the Italian motorways industry," Journal of Regulatory Economics, Springer, vol. 35(2), pages 201-221, April.
    5. Link, Heike & Nilsson, Jan-Eric, 2005. "Infrastructure," Research in Transportation Economics, Elsevier, vol. 14(1), pages 49-83, January.
    6. Heike Link, 2003. "Estimates of marginal infrastructure costs for different modes of transport," ERSA conference papers ersa03p75, European Regional Science Association.
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    Cited by:

    1. Daniel Albalate & Jordi Rosell, 2016. "Persistent and transient efficiency on the stochastic production and cost frontiers – an application to the motorway sector," Working Papers XREAP2016-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Oct 2016.

    More about this item

    Keywords

    Highway; Regulation; Productivity; Price-cap;

    JEL classification:

    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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