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Measuring the Economic Efficiency of Producing Rural Road Services

Author

Listed:
  • Steven C. Deller
  • Carl H. Nelson

Abstract

The research reported here examines the ability of a sample of Midwest township officials to produce low-volume rural road services in an economically efficient manner. Farrell-type measures of input use and scale efficiency are reported. Results suggest that over 50% of costs may be unnecessarily incurred because of input use inefficiency. Correlation between output measures and the efficiency measures suggests that larger jurisdictions are more efficient than smaller jurisdictions. In addition, 84.5% of the townships exhibit technology characterized by increasing returns to scale. These results suggest that jurisdictional consolidation of production-related responsibilities may yield substantial cost savings.

Suggested Citation

  • Steven C. Deller & Carl H. Nelson, 1991. "Measuring the Economic Efficiency of Producing Rural Road Services," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(1), pages 194-201.
    • Handle: RePEc:oup:ajagec:v:73:y:1991:i:1:p:194-201.
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    1. Fernando Antonio Slaibe Postali, 2016. "Oil windfalls and X-inefficiency: evidence from Brazil," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 43(5), pages 699-718, October.
    2. Scorsone, Eric, 2007. "School District and Municipal Reorganization: Research Findings & Policy Proposals," Staff Paper Series 6543, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. Deller, Steven C. & Hinds, David G. & Hinman, Donald L., 2001. "Local Public Services In Wisconsin: Alternatives For Municipalities With A Focus On Privatization," Staff Papers 12658, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    4. Kelly Tiller & Paul Jakus, 2004. "Explaining Cooperation in Municipal Solid Waste Management," Working Papers 2004-07, Utah State University, Department of Economics.
    5. Wong, Ho Lun & Luo, Renfu & Zhang, Linxiu & Rozelle, Scott, 2013. "Providing quality infrastructure in rural villages: The case of rural roads in China," Journal of Development Economics, Elsevier, vol. 103(C), pages 262-274.
    6. Borger, Bruno De & Ferrier, Gary D. & Kerstens, Kristiaan, 1998. "The choice of a technical efficiency measure on the free disposal hull reference technology: A comparison using US banking data," European Journal of Operational Research, Elsevier, vol. 105(3), pages 427-446, March.
    7. Andrew Worthington & Brian Dollery, 2000. "Efficiency Measurement in the Local Public Sector: Econometric and Mathematical Programming Frontier Techniques," School of Economics and Finance Discussion Papers and Working Papers Series 078, School of Economics and Finance, Queensland University of Technology.
    8. Brown, Dennis M. & Flake, Oliver L., 1999. "Rural Transportation: An Annotated Bibliography," Miscellaneous Publications 323881, United States Department of Agriculture, Economic Research Service.
    9. Villani, Salvatore, 2010. "Per un giusto equilibrio tra efficacia ed efficienza nell’attuazione della legge delega sul federalismo fiscale: verso la definizione dei LEP e dei costi standard delle Regioni," MPRA Paper 29513, University Library of Munich, Germany.
    10. Villani, Salvatore, 2010. "Elementi ai fini della definizione della nozione di costo standard: una rassegna della letteratura e delle principali esperienze estere [Basic elements defining the standard cost concept. A survey ," MPRA Paper 29683, University Library of Munich, Germany.
    11. Dervaux, Benoît & Kerstens, Kristiaan & Vanden Eeckaut, Philippe, 1998. "Radial and nonradial static efficiency decompositions: a focus on congestion measurement," Transportation Research Part B: Methodological, Elsevier, vol. 32(5), pages 299-312, June.
    12. Jacques, Charles & Brorsen, B. Wade & Richter, Francisca G. C., 2000. "Consolidating Rural School Districts: Potential Savings and Effects on Student Achievement," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(3), pages 573-583, December.
    13. Lin, J. & Z. & Zhang, Z., 2018. "Does transportation matter to tobacco leaf producers? Evidence from Guizhou, China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276998, International Association of Agricultural Economists.
    14. Tiller, Kelly J. & Jakus, Paul M., 2005. "Applying the Miceli Model to Explain Cooperation in Municipal Solid Waste Management," Agricultural and Resource Economics Review, Cambridge University Press, vol. 34(2), pages 217-225, October.
    15. Briec, Walter & Kerstens, Kristiaan & Prior, Diego & Van de Woestyne, Ignace, 2018. "Testing general and special Färe-Primont indices: A proposal for public and private sector synthetic indices of European regional expenditures and tourism," European Journal of Operational Research, Elsevier, vol. 271(2), pages 756-768.
    16. Kalb, Alexander, 2009. "What determines local governments' technical efficiency? The case of road maintenance," ZEW Discussion Papers 09-047, ZEW - Leibniz Centre for European Economic Research.
    17. Carolin Fritzsche, 2018. "Analyzing the Efficiency of County Road Provision – Evidence from Eastern German Counties," ifo Working Paper Series 249, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    18. Shunxiang Wu & Stephen Devadoss & Yaochi Lu, 2003. "Estimation and decomposition of technical efficiency for sugarbeet farms," Applied Economics, Taylor & Francis Journals, vol. 35(4), pages 471-484.
    19. Alexander Kalb, 2014. "What Determines Local Governments' Cost-efficiency? The Case of Road Maintenance," Regional Studies, Taylor & Francis Journals, vol. 48(9), pages 1483-1498, September.
    20. Brunet, Alexia & McNamara, Kevin T. & Deboer, Larry, 2001. "Alternative Service Delivery Strategies For Local Governments," 2001 Annual meeting, August 5-8, Chicago, IL 20705, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    21. Massiani, Jerome & Ragazzi, Giorgio, 2008. "Costs and efficiency of highway concessionaires: a survey of Italian operators," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 38, pages 85-106.
    22. Trueblood, Michael A. & Honadle, Beth Walter, 1994. "An Overview Of Factors Affecting The Size Of Local Government," Staff Papers 13688, University of Minnesota, Department of Applied Economics.
    23. Krause, Mark A., 1996. "Cost Savings From Consolidating North Dakota'S Counties," Agricultural Economics Reports 23321, North Dakota State University, Department of Agribusiness and Applied Economics.

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