Cost Efficiency and Subsidization in German Local Public Bus Transit

Maria Nieswand and Matthias Walter ()

No 9346, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines the impact of endogenous deficit-balancing subsidies on the cost efficiency of local public bus companies by using alternative frontier cost models for panel data. Thereby, the multidimensional performance estimation incorporates the subsidy variable directly. The empirical analysis relies on a unique dataset of 33 German companies observed over a period of up to twelve years. We find a positive effect of endogenous subsidies on the standard deviation of cost inefficiency implying that the range of companies? cost inefficiency increases with the level of subsidies relative to total costs. Further, we find that non-subsidized firms perform better.

Keywords: Stochastic cost frontier; Endogenous subsidies; Heteroscedasticity; Local public bus transportation; Cost efficiency; Panel data (search for similar items in EconPapers)
JEL-codes: C13 D24 L92 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-eff, nep-eur, nep-reg, nep-tre and nep-ure
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Citations: View citations in EconPapers (1)

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Working Paper: Cost Efficiency and Subsidization in German Local Public Bus Transit (2010)
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