Benchmarking the efficiency of European metros from a production perspective

Abstract

This paper deals with the benchmarking of the technical efficiency of 23 metro systems in Europe. Since financial data reflecting the operating costs and revenues are not often made available to the public, the aim of this work is to develop a method based on production variables to enable large-scale analysis at the European level. The methodology consists of two stages. In the first stage, a gross value of effectiveness is estimated by means of a stochastic frontier regression based on the Cobb-Douglas production function. The results show about half of the considered firms reaching scores higher than 80%. However, these gross effectiveness estimates could be influenced and constrained by long term and external factors that go beyond the control of firms' day-to-day management. For this reason, in the second stage, an exponential multiple regression is estimated to determine the effects of these factors on gross effectiveness. The elasticities obtained through a multiple regression are used for evaluating the net effectiveness, by removing positive or negative contributions to the gross effectiveness that come from the identified “long term” factors. The results show that transit firms operating smaller networks tend to have higher net effectiveness scores in the short-term compared to larger transit firms.