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The Analysis of Efficiency and Productivity in the Korean and Japanese Railways: A Stochastic Cost Frontier Approach  

Park, Jin-Gyeong (한국철도기술연구원)
Kim, Seong-Su (서울대학교 환경대학원)
Publication Information
Journal of Korean Society of Transportation / v.25, no.6, 2007 , pp. 141-157 More about this Journal
Abstract
This paper evaluates the effects of privatization and deregulation on the firm-specific efficiency and total factor productivity (TFP) growth in the Korean and Japanese railways. Using a stochastic frontier approach and a generalized translog functional form, the paper specifies the equation system consisting of a multiproduct variable cost function and input share equations which is estimated with Zellner's iterative seemingly unrelated regression and the corrected least squares method. The Korean and Japanese railway firms are assumed to produce three outputs (Shinkansen passenger-kilometers, incumbent railway passenger-kilometers, ton-kilometers of freight) using three input factors (labor, fuel, maintenance and rolling stock). A monetary value of the ways and fixed installations held by the railroad firm is also included as a quasi-fixed input. The empirical results indicate that the average estimate of cost inefficiency is 2.57% for the total sample and on the average, JNR and JR Kyushu are found to be worst efficient while the most efficient railway firm in the sample is JR West. Also the cost efficiency levels of seven JRs have been improved after the reform and privatization of JNR. The findings also indicate that TFP growth of the privately-owned JRs are higher than those of the government-owned KNR and JNR. Three-island JRs and JR Freight have slightly higher TFP growth than Honshu JRs as well. Thus, the results suggest that managerial autonomy and increased competition via deregulation have improved efficiency and TFP growth.
Keywords
Railways; Korea and Japan; Efficiency; Productivity; Stochastic Cost Frontier Approach;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
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