Productivity,efficiency and technical change in the European railways: A non-parametric approach

The purpose of this paper is to analyse the evolution of productivity in the European railways in the period 1970–95. We use a non-parametric approach that enables changes in productivity to be broken down into variations in efficiency and technical change. The results indicate that the productivity growth is concentrated in the last period (1985–95), when the majority of the companies undertook processes of reforms. This increase in productivity is mainly due to technical progress. We also analyse the determinants of efficiency and, unlike other papers, the technical change, finding that the greater the degree of autonomy and financial independence, the higher the efficiency levels and technical change. This revised version was published online in June 2006 with corrections to the Cover Date.     

A subadditivity test for the cost function of the principal European railways

The objective of this paper is the comparison of the efficiency levels for a set of European rail companies in monopoly situations with respect to hypothetical duopoly situations. More specifically, the aim is to test whether the operating costs function of such companies is subadditive. A cost function is subadditive when a single firm can produce all relevant output vectors cheaper than two or more firms. In order to do so the test developed by Evans and Heckman (1984) will be used. It was applied for the American phone company Bell System to assess the convenience of separating the management of local and long-distance services. The results indicate that at least for the companies of a greater size, an efficiency increase (as measured by lower costs), would be obtained from the separation of the current companies in two different companies of a lower size. Besides, these efficiency gains are greater when the two new companies specialize their production, either on passenger or on freight traffic.