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Introducing regulation in the measurement of efficiency, with an application to the Canadian air carriers industry

Pierre Ouellette, Patrick Petit, Louis-Philippe Tessier-Parent and Stéphane Vigeant ()

European Journal of Operational Research, 2010, vol. 200, issue 1, 216-226

Abstract: This paper proposes a method to measure efficiency in highly regulated capital-intensive industries in the presence of state-owned enterprises. We generalize the data envelopment analysis method to include regulation in the model, as well as the quasi-fixed nature of capital and its links with the firms' investment decisions. The framework is then applied to the Canadian air carriers industry to study the impact of regulation changes on the efficiency of the various carriers, between 1960 and 1999. Our results show that deregulation explains a large part of the measured inefficiency.

Keywords: Data; envelopment; analysis; Investment; Regulation; Airlines; Productivity; Competitiveness (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (38)

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Handle: RePEc:eee:ejores:v:200:y:2010:i:1:p:216-226