The efficiency of Norwegian road toll companies

This paper analyses the level of efficiency at which road toll companies are operated in Norway. Two alternative methods are applied for this purpose: data envelopment analysis (DEA) and stochastic frontier analysis (SFA). The data comprise a total of 20 toll companies that have been in operation in the period 2003–2008. The findings of the paper are as follows: 1) There is a great potential for efficiency improvement in the sector, irrespective of the method used, but the variation in the efficiency scores is dependent on the method used; 2) there is no evidence of economies of scale, as has been found by other authors, such as Odeck 2008, How efficient and productive are road toll companies? Evidence from Norway, Transport Policy. 15, 232–241 and, Amdal, E., Bårdsen, G., Johansen K. and Welde M., 2007. Operating costs in Norwegian toll companies: a panel data analysis. Transportation. 34, 681–695. These results suggest that toll companies could generate significant savings by employing industry best practices. Further, decision makers are warned not to be indifferent to the approach used i.e., DEA and SFA, as these may give very different results.

► We study the efficiency of Norwegian toll companies with respect to operating costs.
► Two alternative methods are applied: data envelopment analysis (DEA) and stochastic frontier analysis (SFA).
► There is a great potential for efficiency improvement in the Norwegian toll road industry.
► The variation in the efficiency scores is dependent on the method used.
► There is no evidence of economies of scale.