Testing for Economies of Scope in European Railways: An Efficiency Analysis

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In this paper, we conduct a pan-European efficiency analysis to investigate the performance of European railways with a particular focus on economies of vertical integration. We test the hypothesis that integrated railways realise economies of scope and, thus, produce railway services with a higher level of efficiency. To determine whether joint or separate production is more efficient, we apply a data envelopment analysis super-efficiency bootstrapping model which relates the efficiency for integrated production to a reference set consisting of separated firms which use a different production technology. We find that for a majority of European railways, economies of scope exist.

Original languageEnglish
JournalJournal of Transport Economics and Policy
Issue number1
Pages (from-to)1-24
Number of pages24
Publication statusPublished - 01.2009