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The federal government, along with many states, has adopted policies favoring the provision of public transit by the private sector. During the 1980's, this turn to contracting to halt rising operating deficits prompted several studies into the impact of contracting on operating efficiencies. Most research found that service contracting saves 10 to 60 percent over publicly operated services. However, no research has yet examined the long-term cost trends of private contracting vis-a-vis public operations. The evaluations done to date often make inappropriate comparisons between small single mode private carriers and large multi-service transit authorities with greater political and social obligations. As a result the findings from these studies are certain to show dramatic savings, yet do not address the underlying dynamics driving transit costs such as political pressures to provide service. This study examined cost efficiency trends for 142 transit operators providing fixed-route bus transit between 1989 and 1993. This analysis produced no evidence that fully contracted operations cost less per revenue hour than publicly operated services doing no contracting. Vehicle and driver scheduling inefficiencies were found to contribute the most unit costs. Estimated elasticities indicate that a 10 percent reduction in vehicle scheduling inefficiency may produce a 19 percent improvement in cost efficiency. A 10 percent improvement in operator scheduling efficiency shows a 6 percent reduction in operating costs per revenue hour. These findings indicate that transit service contracting may not produce cost savings over the long-term and that strategies of decentralization and changes in the craft structure for labor may be more appropriate ways for relieving the fiscal crisis of public transit.

This paper investigates the size-efficiency relation of European cooperative banks during the 2006-2015 period. We employ the Stochastic Frontier Analysis in order to obtain inefficiency estimates and its determinants on the set of 183 cooperative banks from 12 European countries. This work extends the existing literature by focusing on shape of size-efficiency relationship and examining also the post-crisis period after the fall of Lehman Brothers in 2008. Our results show that smaller European cooperative banks are significantly more cost efficient than their bigger peers and that the size-efficiency relation is linear. Interestingly, inefficiency remained roughly stable during the whole observation period without any substantial changes, not even on sub-samples of individual countries. These results imply that no significant consolidation of European cooperative banks can be expected in the near future. We conclude that for cooperatives, it is more efficient to remain small in size rather than to expand. From a policy perspective, we recommend regulators to reflect special nature of cooperative banks and allow them to operate at a small scale enabling their efficiency. As a result, we believe that onesize-fits-all regulation is harmful for efficient operations of cooperative banks in Europe.

PurposeThe purpose of this paper is to assess the efficiency of rice millers and determine factors influencing cost efficiency in Southwest Nigeria using the cost route approach.Design/methodology/approachThe paper analyses cost efficiency of rice millers using primary data collected from 62 respondents through a structured questionnaire. A multi-stage sampling procedure was employed for this purpose. The profile of rice millers and mills were derived using the descriptive analysis. Cost efficiency of the millers was obtained using the quadratic cost function analysis, and Tobit regression was used to determine factors that influence cost efficiency.FindingsThe results showed that cost efficiency indexes range from 1 to 57 percent averaging at 20.2 percent. Large rice mills were found to be most efficient with the mean cost efficiency of 25 percent. Paddy, transport and energy costs contributed positively and significantly (p=0.05 andp=0.01) to cost efficiency. Milling capacity and machine age increase cost efficiency while the distance to purchase paddy and quantity of diesel used reduces cost efficiency.Social implicationsThe paper shows that there is enough potential for rice millers to improve their cost efficiency based on the available technology. This has a direct implication on the economy through the increased domestic production and processing of rice to meet the increasing demand for locally produced rice.Originality/valueThe paper attempts to bridge the gap in the literature of cost efficiency among rice millers in Nigeria, and specifically in the application of the normalized quadratic cost function in estimating cost efficiency in the rice milling sector in Nigeria.

This paper is concerned with the cost efficiency in achieving the Swedish national air quality objectives under uncertainty. To realize an ecologically sustainable society, the parliament has approved a set of interim and long-term pollution reduction targets. However, there are considerable quantification uncertainties on the effectiveness of the proposed pollution reduction measures. In this paper, we develop a multivariate stochastic control framework to deal with the cost efficiency problem with multiple pollutants. Based on the cost and technological data collected by several national authorities, we explore the implications of alternative probabilistic constraints. It is found that a composite probabilistic constraint induces considerably lower abatement cost than separable probabilistic restrictions. The trend is reinforced by the presence of positive correlations between reductions in the multiple pollutants.