Title

MEASURING INEFFICIENCY IN THE NORWEGIAN BUS INDUSTRY USING MULTI-DIRECTIONAL EFFICIENCY ANALYSIS

Document Type

Journal Article

Publication Date

2004

Subject Area

mode - bus

Keywords

Topography, Ownership, Norway, Multi-directional efficiency analysis, Motor bus transportation, Intercity bus transportation, Fuel consumption, Economic efficiency, Economic analysis, Disaggregate analysis, Costs, Case studies, Bus transportation, Bus lines

Abstract

To measure and analyze efficiency in the transportation industry, this paper introduces and demonstrates the advantages of multi-directional efficiency analysis (MEA) in the case of cost data with limited substitution possibilities. Norwegian bus data that has previously been analyzed using econometric models and data envelopment analysis is reconsidered using MEA. Findings show that using MEA makes it possible to disaggregate inefficiency into different components corresponding to different types of cost generating variables and thereby provides both managers of the bus companies and policy makers with more detailed information on possible improvements in performance. Specific results show that about 10% higher costs for companies operating in coastal areas are related to inefficient utilization of the fuel input. This suggests that part of the improvement potential of companies in coastal areas is caused by topographic factors and are thus beyond management control. Controlling for the costal effects shows that ownership has an effect on fuel utilization. The improvement potential in driver costs were found to be about 4% larger for public than for private companies.