Cost Efficiency of Urban Transport in an Era of Widespread Corruption: the Case of New York Street Railways

Donald Vitaliano

Atlantic Economic Journal, 2016, vol. 44, issue 3, No 3, 293-302

Abstract: Abstract Bribery to secure street railway franchises was notorious in the Gilded Age of the late nineteenth century, and New York was the epicenter of this type of fraud. This paper analyzes the cost efficiency of 64 franchises operated in 31 cities across New York state in 1890. The modeling platform is a stochastic frontier estimation of a variable cost function. Contrary to expectations, these private firms are deemed to have minimized costs, and possibly also optimally adjusted their capital stock. Although significant density economies are estimated, no scale or network economies are revealed, which is consistent with the multiplicity of firms operating even in cities of modest size. The efficiency of these firms contrasts sharply with the poor cost efficiency estimated for modern municipal bus operations.

Keywords: Street railways; Cost efficiency; Corruption; Frontier regression; R41; K4; L92; N71 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s11293-016-9510-x

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