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The effect of mergers on efficiency and productivity of public transport services

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  • Odeck, James

Abstract

Merger is a process whereby two or more companies merge into one company to strengthen their market positions. Merger in the bus transport sector has been prevalent in Europe, and elsewhere, since the early 1990s. A question rarely addressed by researchers of transportation is the extent to which mergers lead to efficiency by which services are provided to the public. This is the substantive issue in this paper in which Norwegian data are used to assess the impact that mergers have on the performances of bus companies. The data cover the period 1995-2002; 1995-1998 are the pre-mergers years and the post-merger years are 1999-2002. The framework for the analyses is that of data envelopment analysis and the Malmquist productivity index (MPI) to investigate the impacts of mergers on efficiency and productivity growth, respectively. It is found that: (1) there is great potential for efficiency and productivity improvements in the bus industry; (2) mergers outperformed non-mergers as far as scale efficiency was concerned; and (3) the merger process led to productivity improvements in the post-merger periods for the reasons that merged companies utilized their scale economies to improve efficiencies while the non-mergers significantly became more technically innovative in order to be competitive. These results are an asset to the less-explored field of the impact of mergers in transportation.

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  • Odeck, James, 2008. "The effect of mergers on efficiency and productivity of public transport services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(4), pages 696-708, May.
    • Handle: RePEc:eee:transa:v:42:y:2008:i:4:p:696-708
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    6. Cinzia Daraio & Marco Diana & Flavia Di Costa & Claudio Leporelli & Giorgio Matteucci & Alberto Nastasi, 2014. "Efficiency and effectiveness in the urban public transport sector: a critical review with directions for future research," DIAG Technical Reports 2014-14, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    7. George E. Halkos & Nickolaos G. Tzeremes, 2015. "Measuring Seaports' Productivity: A Malmquist Productivity Index Decomposition Approach," Journal of Transport Economics and Policy, University of Bath, vol. 49(2), pages 355-376, April.
    8. Karlaftis, Matthew G. & Tsamboulas, Dimitrios, 2012. "Efficiency measurement in public transport: Are findings specification sensitive?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 392-402.
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    15. Magnus Söderberg, 2009. "A Broad Performance Benchmark Based On Citizens’ Preferences: The Case Of Swedish Public Transportation," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(4), pages 579-603, December.
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    18. Anand Venkatesh & Shivam Kushwaha, 2017. "Measuring technical efficiency of passenger bus companies in India: a non-radial data envelopment analysis approach," OPSEARCH, Springer;Operational Research Society of India, vol. 54(4), pages 706-723, December.
    19. Per J. Agrell & Pontus Mattsson & Jonas Månsson, 2020. "Impacts on efficiency of merging the Swedish district courts," Annals of Operations Research, Springer, vol. 288(2), pages 653-679, May.
    20. Zhang, Chunqin & Juan, Zhicai & Luo, Qingyu & Xiao, Guangnian, 2016. "Performance evaluation of public transit systems using a combined evaluation method," Transport Policy, Elsevier, vol. 45(C), pages 156-167.
    21. Holmgren, Johan, 2013. "The efficiency of public transport operations – An evaluation using stochastic frontier analysis," Research in Transportation Economics, Elsevier, vol. 39(1), pages 50-57.
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    23. Pestana Barros, Carlos & Peypoch, Nicolas, 2010. "Productivity changes in Portuguese bus companies," Transport Policy, Elsevier, vol. 17(5), pages 295-302, September.
    24. Zhang, Chunqin & Juan, Zhicai & Xiao, Guangnian, 2015. "Do contractual practices affect technical efficiency? Evidence from public transport operators in China," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 80(C), pages 39-55.

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