Persistence and dynamics in the efficiency of toll motorways: The Spanish case

This study performs an empirical analysis of the technical efficiency of toll motorway concessionaire companies in Spain. We estimate a dynamic stochastic frontier model using an input-oriented distance function for 30 concessionaires during the 2003-2015 period. Considering a multi-output production technology with light and heavy vehicles, we estimate an autoregressive dynamic specification under a Bayesian framework that acknowledges persistence in firm efficiency due to adjustment costs. Our results reveal: i) large persistence in technical inefficiency in the toll motorway sector, ii) technical change from 2006 onwards, and iii) increasing returns to scale. We derive both short- and long-run inefficiency estimates and document that long-run inefficiency increases with the number of stretches a firm manages; however, inefficiency is unrelated to the political authority that grants the concession. We also find that the marginal cost of light vehicles per kilometre is about half the one for heavy vehicles.