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Costs and Technology of Public Transit Systems in Italy:Some Insights to Face Inefficiency

Giovanni Fraquelli (), Massimiliano Piacenza () and Graziano Abrate
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Giovanni Fraquelli: HERMES, Centro di Ricerca sull’Economia e il Diritto dei Trasporti Pubblici Locali e dei Servizi Regolamentati, Via Real Collegio 30, 10024 Torino.

CERIS Working Paper from Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY

Abstract: This study provides fresh evidence about the characteristics of technology and cost structure of public transit systems in Italy. The aim is to suggest useful guidelines for facing detected inefficiencies. The analysis is carried out through the estimation of a translog variable cost function. The sample includes 45 Italian public companies. Firms are observed in the years 1996, 1997 and 1998, and operate both in the urban and extra-urban compartments. Results support previous evidence on the existence of natural monopoly at local level and stress the importance of the average speed of vehicles in explaining cost differences between companies. We conclude that cost benefits can be achieved by promoting mergers between firms (whenever possible), introducing some forms of "competition-for-the-market" (e.g., competitive tendering for the single license) and taking more care of the local traffic regulation.

JEL-codes: L5 L92 R41 (search for similar items in EconPapers)
Date: 2001-12
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