Ebook: Regulatory Design and Technical Efficiency: Public Transport in France

Public transport systems are often subject to a close regulatory oversight because of
their economic and social impacts. In the case of France, this has led to an institutional
design that has involved the participation of private rms in the service provision, and the
use of incentive contracts to regulate them, among other characteristics. We study the
eect of these institutional features on the eciency of the rms in the sector. For this, we
use nonparametric Data Envelopment Analysis (DEA) techniques to estimate the input
usage eciency, and explore a few potential institutional and regulatory determinants. We
apply a conditional DEA approach and xed eects second stage regressions to control for
potentially observed and unobserved sources of heterogeneity across dierent environments
in which the rms operate. Our results point to a dierential eect of private and mixed
public-private companies. In particular, having the performance of public operators as
the benchmark, eciency is relatively higher for private rms, but lower when the service
is delegated to a mixed public-private rm. Furthermore, the eects seem to diverge
greatly by contract type when the rm is mixed so that, when the contract is of the cost
reimbursement type, performance is lower than the public rm benchmark, while for other
contract types there are no statistically signicant dierences.
Keywords: Data Envelopment Analysis (DEA); Conditional eciency measures; Twostage eciency analysis; Regulation; Public transport
JEL Classication: C14; L32; L51; L91