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 gen eral, small and large size UBCs are more efficient than their medium size coun terparts. Therefore, there exist s no linear relationship between technical effi ciency 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.
KeywordsUrban Bus CompaniesEfficiencyStochastic Frontier AnalysisIndia
Singh, S.K. and Raghav, S. (2013) Performance Analysis of Publicly Owned Urban Bus Companies in India. Indian Journal of Economics and Business, 12, 243-261.
Barnum, D.T., Karlaftis, M.G. and Tandon, S. (2011) Improving the Efficiency of Metropolitan Area Transit by Joint Analysis of Its Multiple Providers. Transportation Research Part E, 47, 1160-1176. https://doi.org/10.1016/j.tre.2011.04.006
Agarwal, S., Yadav, S.P. and Singh, S.P. (2010) DEA Based Estimation of the Technical Efficiency of State Transport Undertakings in India. Opsearch, 47, 216-230. https://doi.org/10.1007/s12597-011-0035-4
Ferrier, G.D. and Lovell, C.K. (1990) Measuring Cost Efficiency in Banking: Econometric and Linear Programming Evidence. Journal of Econometrics, 46, 229-245. https://doi.org/10.1016/0304-4076(90)90057-Z
Bjurek, H., Hjalmarsson, L. and Forsund, F.R. (1990) Deterministic Parametric and Nonparametric Estimation of Efficiency in Service Production: A Comparison. Journal of Econometrics, 46, 213-227. https://doi.org/10.1016/0304-4076(90)90056-Y
Lovell, C.K. (1993) Production Frontiers and Productive Efficiency. In: Fried, H.O., Lovell, C.K. and Schmidt, S.S., Eds., The Measurement of Productive Efficiency-Techniques and Applications, Oxford University Press, Oxford, 3-67.
Cullinane, K., Wang, T.F., Song, D.W. and Ji, P. (2006) The Technical Efficiency of Container Ports: Comparing Data Envelopment Analysis and Stochastic Frontier Analysis. Transportation Research Part A, 40, 354-374. https://doi.org/10.1016/j.tra.2005.07.003
Jarboui, S., Forget, P. and Boujelbene, Y. (2012) Public Road Transport Efficiency: A Literature Review via the Classification Scheme. Public Transport, 4, 101-128. https://doi.org/10.1007/s12469-012-0055-3
Singh, S.K. and Venkatesh, A. (2003) Comparing Efficiency across State Transport Undertakings: A Production Frontier Approach. Indian Journal of Transport Management, 27, 374-391.
Farrell, M.J. (1957) The Measurement of Productive Efficiency. Journal of the Royal Statistical Society. Series A (General), 120, 253-290. https://doi.org/10.2307/2343100
Olatubi, W.O. and Dismukes, D.E. (2000) A Data Envelopment Analysis of the Levels and Determinants of Coal-Fired Electric Power Generation Performance. Utilities Policy, 9, 47-59. https://doi.org/10.1016/S0957-1787(01)00004-2
Boame, A.K. (2004) The Technical Efficiency of Canadian Urban Transit Systems. Transportation Research Part E, 40, 401-416. https://doi.org/10.1016/j.tre.2003.09.002
Battese, G.E. and Coelli, T.J. (1995) A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data. Empirical Economics, 20, 325-332. https://doi.org/10.1007/BF01205442
Jha, R. and Singh, S.P. (1994) Inter-Temporal and Cross-Section Variations in Technical Efficiency in the Indian Railways. International Journal of Transport Economics/Rivista internazionale di economia dei trasporti, 21, 57-73.
Jorgensen, F., Pedersen, P.A. and Volden, R. (1997) Estimating the Inefficiency in the Norwegian Bus Industry from Stochastic Cost Frontier Models. Transportation, 24, 421-433. https://doi.org/10.1023/A:1004975000392
Jha, R. and Singh, S.K. (2001) Small Is Efficient: A Frontier Approach to Cost Inefficiencies in Indian State Road Transport Undertakings. International Journal of Transport Economics/Rivista internazionale di economia dei trasporti, 28, 95-114.
Battese, G.E. and Corra, G.S. (1977) Estimation of a Production Frontier Model: With Application to the Pastoral Zone of Eastern Australia. Australian Journal of Agricultural and Resource Economics, 21, 169-179. https://doi.org/10.1111/j.1467-8489.1977.tb00204.x
De Borger, B., Kerstens, K. and Costa, A. (2002) Public Transit Performance: What Does One Learn from Frontier Studies? Transport Reviews, 22, 1-38. https://doi.org/10.1080/01441640010020313
Jarboui, S., Pascal, F. and Younes, B. (2013) Public Road Transport Efficiency: A Stochastic Frontier Analysis. Journal of Transportation Systems Engineering and Information Technology, 13, 64-71. https://doi.org/10.1016/S1570-6672(13)60123-3
Saxena, P. and Saxena, R.R. (2010) Measuring Efficiencies in Indian Public Road Transit: A Data Envelopment Analysis Approach. Opsearch, 47, 195-204. https://doi.org/10.1007/s12597-011-0034-5
Kumar, S. (2011) State Road Transport Undertakings in India: Technical Efficiency and Its Determinants. Benchmarking: An International Journal, 18, 616-643. https://doi.org/10.1108/14635771111166794
Mohapatra, P.K.J. and Dutta, R.K. (1990) An Intermodal Investment Decision Model in the Transport Sector. Omega, 18, 203-212. https://doi.org/10.1016/0305-0483(90)90067-J
Ahern, A. and Anandarajah, G. (2007) Railway Projects Prioritisation for Investment: Application of Goal Programming. Transport Policy, 14, 70-80. https://doi.org/10.1016/j.tranpol.2006.10.003
Lun, Y.V. and Quaddus, M.A. (2011) Firm Size and Performance: A Study on the Use of Electronic Commerce by Container Transport Operators in Hong Kong. Expert Systems with Applications, 38, 7227-7234. https://doi.org/10.1016/j.eswa.2010.12.029
Halkos, G.E. and Tzeremes, N.G. (2007) Productivity Efficiency and Firm Size: An Empirical Analysis of Foreign Owned Companies. International Business Review, 16, 713-731. https://doi.org/10.1016/j.ibusrev.2007.06.002
Boyle, G.E. and McCarthy, T.G. (1997) A Simple Measure of β-Convergence. Oxford Bulletin of Economics and Statistics, 59, 257-264. https://doi.org/10.1111/1468-0084.00063
Jha, R., Mohanty, M., Chatterjee, S. and Chitkara, P. (1999) Tax Efficiency in Selected Indian States. Empirical Economics, 24, 641-654. https://doi.org/10.1007/s001810050077
Hensher, D.A. (1987) Productive Efficiency and Ownership of Urban Bus Services. Transportation, 14, 209-225. https://doi.org/10.1007/BF00837530
De Rus, G. and Nombela, G. (1997) Privatisation of Urban Bus Services in Spain. Journal of Transport Economics and Policy, 31, 115-129.
Karlaftis, M.G. (2004) A DEA Approach for Evaluating the Efficiency and Effectiveness of Urban Transit Systems. European Journal of Operational Research, 152, 354-364. https://doi.org/10.1016/S0377-2217(03)00029-8