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A platform for research: civil engineering, architecture and urbanism
Effects of government regulations and input subsidies on cost efficiency: A decomposition approach
Abstract This paper studies the effects of regulations, input subsidies, their interactions and technical efficiency on cost efficiency and shows how a firm's cost efficiency relates to society's cost efficiency. It finds that from societal viewpoint, the average US public transit system is 45% cost efficient, a product of 84.4% technical efficiency and 53.5% allocative efficiency. From a transit system's viewpoint, it is 78.6%, 59.5% and 84.4% cost efficient when it internalizes input subsidies, regulations and both respectively. Additionally, it finds that the incentive tier regulation reduces capital-labor allocative distortion, the federal labor protection regulation increases nonlabor-labor allocative distortion and cost inefficiency, the incentive regulation increases cost efficiency, and the bus useful-life regulation increases cost inefficiency through increasing technical inefficiency. Together, in the sample of transit systems studied the regulations studied counteract the capital-labor allocative distortion from the subsidies and reinforce the nonlabor-labor allocative distortion from subsidies.
Highlights Paper presents a method to decompose cost efficiency based on regulations and subsidy. It decomposes allocative and technical inefficiencies among their sources. Transit systems have 51.7% cost efficiency, 88.4% technical efficiency and 58.5% allocative efficiency. Those that internalize input subsidy compared to input regulations are more efficient.
Effects of government regulations and input subsidies on cost efficiency: A decomposition approach
Abstract This paper studies the effects of regulations, input subsidies, their interactions and technical efficiency on cost efficiency and shows how a firm's cost efficiency relates to society's cost efficiency. It finds that from societal viewpoint, the average US public transit system is 45% cost efficient, a product of 84.4% technical efficiency and 53.5% allocative efficiency. From a transit system's viewpoint, it is 78.6%, 59.5% and 84.4% cost efficient when it internalizes input subsidies, regulations and both respectively. Additionally, it finds that the incentive tier regulation reduces capital-labor allocative distortion, the federal labor protection regulation increases nonlabor-labor allocative distortion and cost inefficiency, the incentive regulation increases cost efficiency, and the bus useful-life regulation increases cost inefficiency through increasing technical inefficiency. Together, in the sample of transit systems studied the regulations studied counteract the capital-labor allocative distortion from the subsidies and reinforce the nonlabor-labor allocative distortion from subsidies.
Highlights Paper presents a method to decompose cost efficiency based on regulations and subsidy. It decomposes allocative and technical inefficiencies among their sources. Transit systems have 51.7% cost efficiency, 88.4% technical efficiency and 58.5% allocative efficiency. Those that internalize input subsidy compared to input regulations are more efficient.
Effects of government regulations and input subsidies on cost efficiency: A decomposition approach
Obeng, K. (author) / Sakano, R. (author)
Transport Policy ; 91 ; 95-107
2020-03-30
13 pages
Article (Journal)
Electronic Resource
English
Online Contents | 1995
Specification of a long run transit cost function to estimate input bias from subsidies
| Taylor & Francis Verlag | 1994