Volume 24, Issue 2 (Summer 2019)
JEPR 2019, 24(2): 31-58 |
Back to browse issues page
Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
Norani-Azad S, Khodadad-Kashi F. (2019). Evaluating Efficiency and Productivity Growth in Passenger Transportation Industry: Application of Stochastic Frontier Function. JEPR. 24(2), 31-58. doi:10.29252/jpbud.24.2.31
URL: http://jpbud.ir/article-1-1834-en.html
URL: http://jpbud.ir/article-1-1834-en.html
1- Assistant Professor, Department of Economics, Payame Noor University, Tehran, Iran. , noraniazad@pnu.ac.ir
2- Professor, Department of Economics, Payame Noor University, Tehran, Iran.
2- Professor, Department of Economics, Payame Noor University, Tehran, Iran.
Abstract: (4843 Views)
The main purpose of this study is to measure the productivity and efficiency of Iran’s airline industry. To meet this ends, the data of 12 companies in the airline industry were used over the period 2011-2018. Also, this article sought to measure total factor productivity, technological progress, scale efficiency, and changes in technical efficiency by using a stochastic frontier and parametric approaches. The results show that the highest total factor productivity and change efficiency occurred in 2014. Moreover, among the effective factors on productivity, the change efficiency and economies of scale have the greatest impact. Although some of the companies exhausted all the scale economies, some still have not done that yet. Therefore, by increasing product scale and air fleet capacity, economies of scale can be exploited further. In addition, the results imply that increasing the market share of each company leads to a reduction of inefficiency in this industry. Thus market share being aligned with technological progress, scale efficiency and change efficiency are the determining factors in enhancing total factor productivity and efficiency in this industry.
Keywords: Total Factor Productivity, Scale Efficiency, Technical Efficiency, Technological Progress Rate, Airline Transportation, Growth Accounting, Stochastic Frontier.
Type of Study: Research |
Subject:
economic development, regional economics and growth
Received: Oct 18 2019 | Accepted: Apr 12 2020 | ePublished: Aug 10 2020
Received: Oct 18 2019 | Accepted: Apr 12 2020 | ePublished: Aug 10 2020
References
1. Aigner, D. J., & Chu, S.-F. (1968). On Estimating the Industry Production Function. The American Economic Review, 58(4), 826-839.
2. Aigner, D. J., Amemiya, T., & Poirier, D. J. (1976). On the Estimation of Production Frontiers: Maximum Likelihood Estimation of the Parameters of a Discontinuous Density Function. International Economic Review, 17(2), 377-396. [DOI:10.2307/2525708]
3. Aigner, D., Lovell, C. K., & Schmidt, P. (1977). Formulation and Estimation of Stochastic Frontier Production Function Models. Journal of Econometrics, 6(1), 21-37. [DOI:10.1016/0304-4076(77)90052-5]
4. Badunenko, O., Fritsch, M., & Stephan, A. (2006). What Determines the Technical Efficiency of a Firm? The Importance of Industry, Location, and Size. Arbeits- und Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Friedrich-Schiller-Universität Jena: ISSN 1611-1311
5. Battese, G. E., & Coelli, T. J. (1988). Prediction of Firm Level Technical Inefficiencies with a Generalized Frontier Production Function. Journal of Econometrics, 38(1), 387-399. [DOI:10.1016/0304-4076(88)90053-X]
6. Battese, G. E., & Coelli, T. J. (1992). Frontier Production Functions, Technical Efficiency and Panel Data: With Application to Paddy Farmers in India. Journal of Productivity Analysis, 3(1-2), 153-169. [DOI:10.1007/BF00158774]
7. Battese, G. E., & Coelli, T. J. (1995). A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data. Empirical Economics, 20(2), 325-332. [DOI:10.1007/BF01205442]
8. Chatzimichael, K., & Liasidou, S. (2019). A Parametric Decomposition of Hotel-Sector Productivity Growth. International Journal of Hospitality Management, 76(1), 206-215. [DOI:10.1016/j.ijhm.2018.05.010]
9. Coelli, T. J. (1996). A Guide to FRONTIER Version 4.1: A Computer Program for Stochastic Frontier Production and Cost Function Estimation. CEPA Working papers 96/07.
10. Coelli, T. J., Rao, D. S. P., O'Donnell, C. J., & Battese, G. E. (2005). An Introduction to Efficiency and Productivity Analysis: Springer Science & Business Media.
11. Ding, S., Guariglia, A., & Harris, R. (2016). The Determinants of Productivity in Chinese Large and Medium-Sized Industrial Firms, 1998-2007. Journal of Productivity Analysis, 45(2), 131-155. [DOI:10.1007/s11123-015-0460-0]
12. Duygun, M., Shaban, M., Sickles, R. C., & Weyman-Jones, T. (2013). Efficiency and Productivity Change in the European Airlines Industry in the Post Liberalization Era. Online: http://rsickles.
13. Førsund, F. R., Lovell, C. K., & Schmidt, P. (1980). A Survey of Frontier Production Functions and of Their Relationship to Efficiency Measurement. Journal of Econometrics, 13(1), 5-25. [DOI:10.1016/0304-4076(80)90040-8]
14. Han, G., Kalirajan, K., & Singh, N. (2004). Productivity, Efficiency and Economic Growth: East Asia and the Rest of the World. The Journal of Developing Areas, 37(2), 99-118. [DOI:10.1353/jda.2004.0025]
15. Huang, C. J., & Liu, J.-T. (1994). Estimation of a Non-Neutral Stochastic Frontier Production Function. Journal of Productivity Analysis, 5(2), 171-180. [DOI:10.1007/BF01073853]
16. Hultberg, P. T., Nadiri, M. I., & Sickles, R. C. (2004). Cross-Country Catch-Up in the Manufacturing Sector: Impacts of Heterogeneity on Convergence and Technology Adoption. Empirical Economics, 29(4), 753-768. [DOI:10.1007/s00181-004-0209-5]
17. Kim, S., & Han, G. (2001). A Decomposition of Total Factor Productivity Growth in Korean Manufacturing Industries: A Stochastic Frontier Approach. Journal of Productivity Analysis, 16(3), 269-281. [DOI:10.1023/A:1012566812232]
18. Kumbhakar, S. C., & Lovell, C. K. (2003). Stochastic Frontier Analysis: Cambridge University Press.
19. Kumbhakar, S. C., Amundsveen, R., Kvile, H. M., & Lien, G. (2015). Scale Economies, Technical Change and Efficiency in Norwegian Electricity Distribution, 1998-2010. Journal of Productivity Analysis, 43(3), 295-305. [DOI:10.1007/s11123-014-0427-6]
20. Meeusen, W., & Van Den Broeck, J. (1977). Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error. International Economic Review, 18(2), 435-444. [DOI:10.2307/2525757]
21. Njuki, E., Bravo-Ureta, B. E., & O'Donnell, C. J. (2019). Decomposing Agricultural Productivity Growth Using a Random-Parameters Stochastic Production Frontier. Empirical Economics, 57(3), 839-860. [DOI:10.1007/s00181-018-1469-9]
22. O'Donnell, C. J. (2014). Econometric Estimation of Distance Functions and Associated Measures of Productivity and Efficiency Change. Journal of Productivity Analysis, 41(2), 187-200. [DOI:10.1007/s11123-012-0311-1]
23. Roy, P. K., & Das, P. S. (2018). Productivity Growth Decomposition in the Manufacturing Industries of Food, Beverages, and Tobacco Products in India: A Stochastic Frontier Approach. Arthshastra Indian Journal of Economics & Research, 7(1), 37-57. [DOI:10.17010/aijer/2018/v7i1/122138]
24. Schmidt, P. (1985). Frontier Production Functions. Econometric Reviews, 4(2), 289-328. [DOI:10.1080/07474938608800089]
25. Shahabinejad, V., Zare Mehrjerdi, M. R., & Yaghoubi, M. (2013). Total Factor Productivity Growth, Technical Change and Technical Efficiency Change in Asian Economies: Decomposition Analysis. Iranian Journal of Economic Studies, 2(2), 47-69.
26. Sharma, S. C., Sylwester, K., & Margono, H. (2007). Decomposition of Total Factor Productivity Growth in US States. The Quarterly Review of Economics and Finance, 47(2), 215-241. [DOI:10.1016/j.qref.2006.08.001]
27. Sickles, R. C., Hao, J., & Shang, C. (2014). Panel Data and Productivity Measurement: An Analysis of Asian Productivity Trends. Journal of Chinese Economic and Business Studies, 12(3), 211-231. [DOI:10.1080/14765284.2014.931428]
28. Stevenson, R. E. (1980). Likelihood Functions for Generalized Stochastic Frontier Estimation. Journal of Econometrics, 13(1), 57-66. [DOI:10.1016/0304-4076(80)90042-1]
29. Tovar, B., & Martín-Cejas, R. R. (2010). Technical Efficiency and Productivity Changes in Spanish Airports: A Parametric Distance Functions Approach. Transportation Research Part E: Logistics and Transportation Review, 46(2), 249-260. [DOI:10.1016/j.tre.2009.08.007]
30. Yu, C. (2016). Airline Productivity and Efficiency: Concept, Measurement, and Applications. In Airline Efficiency (11-53): Emerald Group Publishing Limited. [DOI:10.1108/S2212-160920160000005002]
| Rights and permissions | |
.jpg) |
This work is licensed under a Creative Commons Attribution 4.0 International License. |
