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Scale, quality and efficiency in road maintenance: Evidence for English local authorities

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  • Wheat, Phill

Abstract

This paper outlines the first econometric stochastic frontier efficiency analysis of road maintenance costs for local authorities in England in the academic literature. It is motivated by current public sector austerity requiring local authorities to provide efficient highway functions both in terms of learning from best practice (economic efficiency) and potential reorganisation to exploit economies of scale (scale efficiency). The analysis utilises a road condition measure and an end user (public) satisfaction indicator as well as road length and traffic factors. The availability of public satisfaction data is particularly important as incorporation of such a measure into benchmarking is currently in its infancy in economic regulation but is increasing in prominence, such as in regulation of health care. Evidence is found for an optimal road length which has implications for the current trend to merge the delivery of highways services across local authorities. Bigger is not necessarily better. A positive relationship is found between public satisfaction and cost which is strongest for very low or high public satisfaction. Finally, the median cost efficiency is 83% which implies many authorities have the opportunity to save substantial sums by adopting best practice without reducing service quality.

Suggested Citation

  • Wheat, Phill, 2017. "Scale, quality and efficiency in road maintenance: Evidence for English local authorities," Transport Policy, Elsevier, vol. 59(C), pages 46-53.
    • Handle: RePEc:eee:trapol:v:59:y:2017:i:c:p:46-53
    DOI: 10.1016/j.tranpol.2017.06.002
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    References listed on IDEAS

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    1. Henrik Braconier & Mauro Pisu & Debra Bloch, 2013. "The Performance of Road Transport Infrastructure and its Links to Policies," OECD Economics Department Working Papers 1016, OECD Publishing.
    2. Heike Link, 2014. "A Cost Function Approach for Measuring the Marginal Cost of Road Maintenance," Journal of Transport Economics and Policy, University of Bath, vol. 48(1), pages 15-33, January.
    3. Link, Heike, 2006. "An econometric analysis of motorway renewal costs in Germany," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 19-34, January.
    4. Smith, Andrew & Wheat, Phill & Smith, Gregory, 2010. "The role of international benchmarking in developing rail infrastructure efficiency estimates," Utilities Policy, Elsevier, vol. 18(2), pages 86-93, June.
    5. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    6. Phill Wheat & Andrew S. J. Smith, 2008. "Assessing the Marginal Infrastructure Maintenance Wear and Tear Costs for Britain's Railway Network," Journal of Transport Economics and Policy, University of Bath, vol. 42(2), pages 189-224, May.
    7. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    8. Andrew Smith & Phill Wheat, 2012. "Estimation of cost inefficiency in panel data models with firm specific and sub-company specific effects," Journal of Productivity Analysis, Springer, vol. 37(1), pages 27-40, February.
    9. Andersson, Mats & Smith, Andrew & Wikberg, Åsa & Wheat, Phill, 2012. "Estimating the marginal cost of railway track renewals using corner solution models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(6), pages 954-964.
    10. Patricia Hendren & Debbie Niemeier, 2008. "Identifying peer states for transportation system evaluation & policy analyses," Transportation, Springer, vol. 35(4), pages 445-465, July.
    11. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    Cited by:

    1. Andrew S. J. Smith & Jan-Eric Nilsson & Ivan Ridderstedt & Oskar Johansson, 2023. "Efficiency measurement in the tendering of road surface renewal contracts," Journal of Productivity Analysis, Springer, vol. 60(2), pages 189-202, October.
    2. Li, Sirui & Liu, Ying & Wang, Pengfei & Liu, Peng & Meng, Jun, 2020. "A novel approach for predicting urban pavement damage based on facility information: A case study of Beijing, China," Transport Policy, Elsevier, vol. 91(C), pages 26-37.
    3. lo Storto, Corrado, 2020. "Performance evaluation of social service provision in Italian major municipalities using Network Data Envelopment Analysis," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    4. Macedo, Daniela Pereira & Marques, António Cardoso & Damette, Olivier, 2020. "The impact of the integration of renewable energy sources in the electricity price formation: is the Merit-Order Effect occurring in Portugal?," Utilities Policy, Elsevier, vol. 66(C).
    5. Yarmukhamedov, Sherzod & Smith, Andrew S.J. & Thiebaud, Jean-Christophe, 2020. "Competitive tendering, ownership and cost efficiency in road maintenance services in Sweden: A panel data analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 136(C), pages 194-204.
    6. Phill Wheat & Alexander D. Stead & William H. Greene, 2019. "Robust stochastic frontier analysis: a Student’s t-half normal model with application to highway maintenance costs in England," Journal of Productivity Analysis, Springer, vol. 51(1), pages 21-38, February.
    7. Jussila Hammes, Johanna & Volden, Gro Holst & Welde, Morten & Börjesson, Maria & Odeck, James, 2021. "Finding transport projects with high value for money : what are the socio-geographic determinants?," Working Papers 2021:4, Swedish National Road & Transport Research Institute (VTI).
    8. Russ Kashian & Nicholas Lovett & Yuhan Xue, 2020. "Has the affordable care act affected health care efficiency?," Journal of Regulatory Economics, Springer, vol. 58(2), pages 193-233, December.

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