EconPapers    
Economics at your fingertips  
 

Effects of government regulations and input subsidies on cost efficiency: A decomposition approach

K. Obeng and R. Sakano

Transport Policy, 2020, vol. 91, issue C, 95-107

Abstract: This paper studies the effects of regulations, input subsidies, their interactions and technical efficiency on cost efficiency and shows how a firm's cost efficiency relates to society's cost efficiency. It finds that from societal viewpoint, the average US public transit system is 45% cost efficient, a product of 84.4% technical efficiency and 53.5% allocative efficiency. From a transit system's viewpoint, it is 78.6%, 59.5% and 84.4% cost efficient when it internalizes input subsidies, regulations and both respectively. Additionally, it finds that the incentive tier regulation reduces capital-labor allocative distortion, the federal labor protection regulation increases nonlabor-labor allocative distortion and cost inefficiency, the incentive regulation increases cost efficiency, and the bus useful-life regulation increases cost inefficiency through increasing technical inefficiency. Together, in the sample of transit systems studied the regulations studied counteract the capital-labor allocative distortion from the subsidies and reinforce the nonlabor-labor allocative distortion from subsidies.

Keywords: Transportation; Cost efficiency; Allocative efficiency; Technical efficiency; Input subsidy; Regulations (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0967070X18308631
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:trapol:v:91:y:2020:i:c:p:95-107

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.tranpol.2020.03.015

Access Statistics for this article

Transport Policy is currently edited by Y. Hayashi

More articles in Transport Policy from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-07-01
Handle: RePEc:eee:trapol:v:91:y:2020:i:c:p:95-107