Public Enterprise Efficiency: The Case of the New York Canals

Donald Vitaliano

Review of Industrial Organization, 2015, vol. 46, issue 2, 169-182

Abstract: A random effects stochastic frontier variable cost function is estimated for the Erie Canal and nine interconnected lateral canals in New York, covering the period 1837–1881. Variable costs are 50 % above least cost for the Erie and 42 % above across all the 10 canals. Inefficiency does not vary over time in response to numerous changes in canal administrative structures and personnel or the advent of railroads. The canal system was plagued by documented waste, fraud and mismanagement throughout its history. A privatized, price capped Erie Canal was proposed in 1817, but rejected on political grounds. Copyright Springer Science+Business Media New York 2015

Keywords: Cost efficiency; Erie canal; Public enterprise; R5; D24; N7; C1; H110; H4 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s11151-014-9448-6

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