 A subadditivity test for the cost function of the principal European railwaysTransport Reviews, 2000, vol. 20, issue 3, 275-290 Abstract: The objective of this paper is the comparison of the efficiency levels for a set of European rail companies in monopoly situations with respect to hypothetical duopoly situations. More specifically, the aim is to test whether the operating costs function of such companies is subadditive. A cost function is subadditive when a single firm can produce all relevant output vectors cheaper than two or more firms. In order to do so the test developed by Evans and Heckman (1984) will be used. It was applied for the American phone company Bell System to assess the convenience of separating the management of local and long-distance services. The results indicate that at least for the companies of a greater size, an efficiency increase (as measured by lower costs), would be obtained from the separation of the current companies in two different companies of a lower size. Besides, these efficiency gains are greater when the two new companies specialize their production, either on passenger or on freight traffic. Date: 2000 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:transr:v:20:y:2000:i:3:p:275-290 Ordering information: This journal article can be ordered from Access Statistics for this article Transport Reviews is currently edited by Professor David Banister and Moshe Givoni More articles in Transport Reviews from Taylor & Francis Journals |
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