Efficiency Measurement in Network Industries: Application to the Swiss Railway Companies

Mehdi Farsi, Massimo Filippini and William Greene

Journal of Regulatory Economics, 2005, vol. 28, issue 1, 69-90

Abstract: The persistence of increasingly high government subsidies in Switzerland’s railroads has led the federal and cantonal authorities to discussing the possibility of high-powered incentive contracts such as those based on cost efficiency benchmarking. Railways are however, characterized by a high degree of unobserved heterogeneity that could bias the efficiency estimates. This paper examines the performance of several panel data models to measure cost efficiency in network industries. The unobserved firm-specific effects and the resulting biases are studied through a comparative study of several stochastic frontier models, applied to a panel of 50 railway companies operating over a 13-year period. Copyright Springer Science+Business Media, Inc. 2005

Keywords: cost efficiency; incentive regulation; railroads; scale economies (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (94)

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Working Paper: Efficiency Measurement in Network Industries: Application to the Swiss Railway Companies (2004)
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DOI: 10.1007/s11149-005-2356-9

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