Public Road Transport Efficiency: A Stochastic Frontier Analysis

The objectives of this paper are to measure the technical efficiency of 64 public road transport operators in 18 countries and to investigate the degree to which various factors influence efficiency levels in these firms. Stochastic frontier analysis (SFA) methods are applied to the sample over a twelve year period from 2000 to 2011. The empirical results indicate that operating profit, investment and firm size have a significant influence on technical efficiency levels. Conclusions indicate that technical efficiency level of public road transport operators varies between 0.46 and 0.95. Observations can be made that large-size operators with more investment capacity tend to be more technically efficient than small-size operators. Finally, the results concluded that operators from developed countries are technically more efficient than those of developing countries.