The paper analyses the issue of cost efficiency for eight main European railroads in a sample period of 17 years. Measures of technical and allocative efficiency are obtained from a stochastic cost frontier model, with minimal cost described by a translog cost system. In the model, the cost of allocative inefficiency is estimated simultaneously from the shares' errors, whereas technical inefficiency is modelled by a (half normal) positive departure from the cost frontier. Results show a negligible effect of allocative inefficiency on firms' costs, whereas the cost of technical inefficiency appears to be significant.
VISCONTI PARISIO, L. (1999). A Comparative Analysis of European Railroads Efficiency: a Cost Frontier Approach. APPLIED ECONOMICS, 31(7), 815-823 [10.1080/000368499323788].
A Comparative Analysis of European Railroads Efficiency: a Cost Frontier Approach
VISCONTI PARISIO, LUCIA
1999
Abstract
The paper analyses the issue of cost efficiency for eight main European railroads in a sample period of 17 years. Measures of technical and allocative efficiency are obtained from a stochastic cost frontier model, with minimal cost described by a translog cost system. In the model, the cost of allocative inefficiency is estimated simultaneously from the shares' errors, whereas technical inefficiency is modelled by a (half normal) positive departure from the cost frontier. Results show a negligible effect of allocative inefficiency on firms' costs, whereas the cost of technical inefficiency appears to be significant.
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