Technical Efficiency versus Technical Change--the British Passenger Train Operators

This chapter considers technical efficiency gains that have been achieved since privatization of the British passenger railway in 1996. The original motivation for the research was to build on previous productivity studies through the estimation of stochastic production function. Such a method allows a more detailed analysis of the productivity gains achieved in the British passenger railway since 1996, i.e., the effect of privatization, by splitting productivity gains down between improvements in management efficiency and changes in technical progress. Consequently, this should provide a more accurate and insightful analysis of industry productivity gains. The second part of the research was to estimate productivity gains in a similar fashion for the previously nationalized operator, British Rail, and to compare the two sets of results. The final part of the chapter was to investigate the effect of company size on efficiency. As the reader will learn, not all things went to plan and the issues that arise are outlined in this chapter.

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