Efficiency of Urban Bus Companies in India: A Stochastic Frontier Analysis

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DOI: 10.4236/tel.2017.77130    930 Downloads   1,949 Views  
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ABSTRACT

The main aim of this paper is to measure the technical efficiency of publicly owned urban bus companies (UBCs) in India for the period 2000-01 to 2012-13. To examine the efficiency as well as determinants of the same, we estimated a stochastic production frontier based on a translog production function using the maximum likelihood methods. The empirical results reveal that profit and fleet utilization have a significant influence on technical efficiency of UBCs. We find that substantial inefficiencies, averaging between 12 to 41 percent, exist; in general, small and large size UBCs are more efficient than their medium size counterparts. Therefore, there exists no linear relationship between technical efficiency and firm size. We also examined the temporal relationship of the cross-sectional rankings of individual UBCs’ technical efficiency estimates. To address this issue, we calculated Kendall’s index of rank concordance and coefficient of variation of technical efficiency for sample period. It is found that, by and large, there has been stability in ranks across UBCs in regard to their technical efficiency.

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Singh, S. (2017) Efficiency of Urban Bus Companies in India: A Stochastic Frontier Analysis. Theoretical Economics Letters, 7, 1925-1939. doi: 10.4236/tel.2017.77130.
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