Efficiency Analysis of Privatization Using DEA and MPI

The reforms enacted by the Junichiro Koizumi government in Japan included the limited privatization of four public highway corporations. This study considers the effect of this reform on the overall efficiency of the public highway corporations and whether the corporations were all equally efficient. Using Data Envelopment Analysis (DEA) and the Malmquist Productivity Index (MPI), the study found that there were no overall post-privatization efficiency gains and that the efficiency levels of the privatized corporations depended on the size of their operational regions and the sophistication of their technologies. It suggests that stakeholders designing policies for future privatizations of public corporations consider economies of scale and the degree of technological advancement.

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