REGULATION AND EFFICIENCY: THE CASE OF EUROPEAN RAILWAYS

During the long period of regulation of the railway system in Europe (1950s-1990s) the companies notably improved their levels of productivity. However, parallel to this, the state of their financial accounts also significantly worsened. In order to explain this fact we have estimated both cost and revenue frontier functions, calculating the losses associated with both cost and revenue inefficiencies as well as inefficiencies on the cost side. The results obtained show the existence of significant potential losses of revenue, which can be explained above all by the strong policy of regulation and intervention reigning in this period. A better commercial policy and a supply adapted to market conditions seem to be two unavoidable requisites for the future of European rail policy if the companies' financial burdens are to be reduced.

[1]  W. Meeusen,et al.  Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error , 1977 .

[2]  Jonathan Cowie,et al.  MEASURING THE EFFICIENCY OF EUROPEAN RAILWAYS. , 1996 .

[3]  Harold O. Fried,et al.  The measurement of productive efficiency : techniques and applications , 1993 .

[4]  Y. Braunstein,et al.  A Composite Cost Function for Multiproduct Firms with an Application to Economies of Scope in Banking , 1992 .

[5]  Kevin E. Rogers.  Nontraditional activities and the efficiency of US commercial banks , 1998 .

[6]  Allen N. Berger,et al.  Do consumers pay for one-stop banking? Evidence from an alternative revenue function , 1996 .

[7]  J. M. Pastor,et al.  Productivity, efficiency and technical change in the European railways: A non-parametric approach , 1999 .

[8]  P. Bauer.  Recent developments in the econometric estimation of frontiers , 1990 .

[9]  Tae Hoon Oum,et al.  A SURVEY OF PRODUCTIVITY AND EFFICIENCY MEASUREMENT IN RAIL TRANSPORT , 1999 .

[10]  D. Aigner,et al.  P. Schmidt, 1977,?Formulation and estimation of stochastic frontier production function models,? , 1977 .

[11]  J. M. Villarroya,et al.  EFFICIENCY, TECHNICAL CHANGE AND PRODUCTIVITY IN THE EUROPEAN RAIL SECTOR: A STOCHASTIC FRONTIER APPROACH , 2000 .

[12]  T. Oum,et al.  ECONOMIC EFFICIENCY OF RAILWAYS AND IMPLICATIONS FOR PUBLIC POLICY: A COMPARATIVE STUDY OF THE OECD COUNTRIES' RAILWAYS. IN: RAILWAYS , 2002 .

[13]  M. Farrell.  The Measurement of Productive Efficiency , 1957 .

[14]  Pierre Pestieau,et al.  Decomposing efficiency into its managerial and its regulatory components: The case of European railways , 1995 .

[15]  C. Lovell,et al.  On the estimation of technical inefficiency in the stochastic frontier production function model , 1982 .

[16]  F. FitzRoy,et al.  THE DEMAND FOR RAIL TRANSPORT IN EUROPEAN COUNTRIES. , 1995 .

[17]  D. Aigner,et al.  FORMULATION AND ESTIMATION OF STOCHASTIC PRODUCTION FUNCTION MODELS , 1977 .

[18]  Loretta J. Mester,et al.  Inside the Black Box: What Explains Differences in the Efficiencies of Financial Institutions? , 1997 .

[19]  John Preston,et al.  The economics of British rail privatization: an assessment , 1996 .