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2, 2002 |
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| authors |
Massimiliano
PIACENZA Premio Young Economist EARIE 2002 |
| The main objective of this paper is to investigate the way subsidization mechanisms affect the cost efficiency of public transit systems, taking into account the role played by the environmental characteristics of each network. To this end, a cost frontier model is estimated for a seven-year (1993-1999) panel of 45 Italian transit companies run under two different regulatory schemes (cost-plus or fixed-price), using the methodology proposed by Battese and Coelli (1995). The main evidence is that, given network characteristics, transit operators with high-powered incentive contracts (fixed-price subsidies) exhibit lower distortions from minimum costs. Environmental conditions (network speed levels) also have a significant impact on inefficiency differentials. Overall, these results highlight a scope for transport policy to increase X-efficiency. Furthermore, they confirm the importance of incentive theory and modern regulatory economics for the production analysis of regulated utilities. |
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01/25/2004 19:37