Productive efficiency and ownership of urban bus services

The established ownership mix of urban bus operations in Australia provides a unique opportunity to investigate the productivity differences between public and private bus service supply. Using duality theory in economics which links economic indices of factor productivity to the cost structure of a firm, we develop empirical measures of total and partial productivity of inputs, and adjust the differences for the effects of ownership status and operating environment. The evidence supports the notion that private supply of public passenger transport in general has performed more efficiently in the past than public supply, although the differences in productivity need not continue in the future.