The Application of Stochastic Frontier Panel Models in Economic Regulation: Experience from the European Rail Sector

This paper shows how stochastic frontier panel techniques can be used by economic regulators to benchmark regulated firms against international best practice. The authors utilise a unique panel dataset of European rail infrastructure managers (1996–2006). A time-varying inefficiency model, with firm-specific time paths for inefficiency, is adopted. The results were used in the 2008 regulatory review of the British infrastructure manager, Network Rail, and showed that the company faced an efficiency gap of around 40% against European best practice, in line with engineering-based evidence. More widely, the paper highlights the advantages of the inefficiency specification adopted for use in economic regulation.

• Record URL:
  • http://www.sciencedirect.com/science/article/pii/S1366554511001281
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/13665545
• Supplemental Notes:
  • Abstract reprinted with permission from Elsevier
• Authors:
  • Smith, Andrew S J
• Publication Date: 2012-3

Language

• English

Media Info

• Media Type: Web
• Features: Figures; References; Tables;
• Pagination: pp 503-515
• Serial:
  • Transportation Research Part E: Logistics and Transportation Review
  • Volume: 48
  • Issue Number: 2
  • Publisher: Elsevier
  • ISSN: 1366-5545
  • Serial URL: http://www.sciencedirect.com/science/journal/13665545

Subject/Index Terms

• TRT Terms: Business practices; Economic efficiency; Mathematical models; Panel studies; Railroads; Stochastic processes
• Identifier Terms: Network Rail (Firm)
• Uncontrolled Terms: Stochastic frontier model
• Geographic Terms: Europe
• Subject Areas: Administration and Management; Economics; Railroads;

Filing Info

• Accession Number: 01363817
• Record Type: Publication
• Files: TRIS
• Created Date: Feb 27 2012 9:36AM