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Production Characteristics and Efficiency of Korean Railroad Industry using a Distance Function  

Kim, Seong-Ho (인하대학교 경영학과)
Publication Information
Journal of Korean Society of Transportation / v.24, no.5, 2006 , pp. 45-56 More about this Journal
Abstract
In order to construct an information pool on the production characteristics and efficiency of Korean railroad industry, various alternative approaches have to be applied. In this paper we present an empirical application of the distance function to measure the technical efficiency and the production characteristics of Korean railroad industry, The distance function firstly introduced by Shephard (1953) provides the advantage that it does not need information about prices, so it can accommodate the multiple output nature of the railway only using the quantifies as data. This is of great relevance in the context of the public sector such as railroad industry where there are often distinct control mechanisms on input prices. Also the distance function allows us to obtain a measure of technical efficiency as well as a measure of production characteristics. From annual data on Korean railroad industry during 1964-2004, multiple output distance function is estimated using quadratic programming model. The resulting technical efficiency estimates has tended to be improved over the period $1980{\sim}2004$. The indirect Morishima elasticities of substitution indicate that the substitutabilities for labor are relatively very low or impossible. The average scale elasticity is 2.7 which means that increasing the scale by 1per cent will result in an output increase by 2.7 percent. This result indicates that economies of scale are present in the Korean railroad industry.
Keywords
Distance Function; Technical Efficiency; Railroad Industry; Production Charateristics; Quadratic Programming;
Citations & Related Records
Times Cited By KSCI : 1  (Citation Analysis)
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