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Persistent and transient efficiency on the stochastic production and cost frontiers – an application to the motorway sector

Daniel Albalate () and Jordi Rosell
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Daniel Albalate: GiM-IREA, Universitat de Barcelona

No XREAP2016-04, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: This paper implements both stochastic production and cost frontier analyses to estimate the efficiency of toll motorway companies in Spain, the country with the largest number of private concessionaires in this economic sector. Our dataset includes 32 concessionaires with different features for a time span of 26 years (1988-2014). The results support the existence of scale and density economies, showing that an increase in vehicle-kilometers is more important for cost efficiency than extending the motorway. The differences between transient and persistent efficiency are significant, so that we can test for regulatory and ownership differences. The price cap regulation seems to increase management technical efficiency. Regional governments grant better projects than central governments and, as shareholders, they also perform better. However, their performance is not significantly differently from that of full private concessionaires. We also find limited evidence of efficiency gains from privatization. These results help us provide new insights to evaluate policy and regulatory reforms aimed at enhancing technical efficiency in the sector.

Keywords: Motorways; Efficiency; Stochastic Frontier; Concessions; Infrastructure. (search for similar items in EconPapers)
JEL-codes: D22 D24 D78 H4 H54 L25 L32 L33 L5 L9 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2016-10, Revised 2016-10
New Economics Papers: this item is included in nep-eff
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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2016-04.pdf First version, 2016 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2016-04.pdf Revised version, 2016 (application/pdf)

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