Measuring inefficiency in the Norwegian bus industry using multi-directional efficiency analysis

This paper deals with methods of measuring and analyzing efficiency in the transport industry. The aim of the paper is to introduce and demonstrate the advantages of Multi-directional Efficiency Analysis (MEA) in the case of cost data with limited substitution possibilities. For this purpose we reconsider the Norwegian bus data that has previously been analyzed using econometric models and Data Envelopment Analysis; Jørgensenet al. (1995, 1997) and Odeck and Alkadi (2001). It is shown how, using MEA, it becomes possible to disaggregate inefficiency into different components corresponding to different types of cost generating variables and thereby providing both managers of the bus companies and policy makers with more detailed information on possible improvements in performance.