Indirect production function and the output effect of public transit subsidies

Obeng, Kofi

doi:10.1007/s11116-010-9296-7

Cited by 11 publications

(5 citation statements)

References 33 publications

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“…From these studies, fleet age (Z age ), average vehicle speed (Z speed ) and purchased transportation ðZ pur Þ are used as heterogeneity variables. From Equation 1 and extending previous works (Obeng and Sakano, 2009;Obeng, 2011), it can be shown by solving the first-order conditions that the implied minimum cost frontier…”

Section: Theoretical Frameworkmentioning

confidence: 80%

“…1 For a detailed discussion, see Obeng (2011). 2 See Obeng (2011) for a discussion of endogenous transit output and endogenous subsidies as they apply to US operating subsidies and capital subsidies.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…That assumption is applicable where the amount of service to offer is specified but not where the objective is to provide as much service as possible with a given budget. Similarly, the treatment of operating and capital subsidies as exogenous needs revisiting, especially in the US where studies have shown they are endogenous and depend on input levels (Obeng, 2011).…”

Section: Introductionmentioning

confidence: 99%

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Bus transit technical efficiency using latent class stochastic indirect production frontier

Obeng

2013

Applied Economics

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Section: Theoretical Frameworkmentioning

confidence: 80%

Section: Theoretical Frameworkmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Bus transit technical efficiency using latent class stochastic indirect production frontier

Obeng

2013

Applied Economics

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“…This exogeneity makes the simplifying assumption that most of the subsidies are lump-sum. Furthermore, though we treat output as exogenous Obeng (2011) shows that it should be treated as endogenous.…”

Section: Resultsmentioning

confidence: 99%

Examining the Inefficiency of Transit Systems Using Latent Class Stochastic Frontier Models

Sakano¹,

Obeng²

2012

J Transp Res Forum

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This paper estimates a single class stochastic cost frontier model that accounts for heterogeneity by including background variables and a latent class model of the same specification. It is found that both the two-sided random errors and one-sided errors (cost inefficiency) are substantially smaller in the latter model than it is in the former, suggesting possible bias in the estimates of inefficiency from the single class model. Further, 58.9%–68.39% of the calculated inefficiencies are due to differences in technology captured by the latent classes. The paper concludes that using background variables only to capture heterogeneity may exaggerate measured inefficiencies in transit systems and suggests the latent class approach as a solution.

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“…From a social perspective, subsidizing public transportation increases social welfare [23], while subsidizing private transportation decreases social welfare [24,25]. From a business perspective, government subsidies for public transport enterprises not only save inputs of transport enterprises [26], but also increase outputs [27]. Transportation companies that do not operate for profit must also rely on government subsidies to have sufficient funds to purchase vehicles [28].…”

Section: The Impacts Of Subsidies On Urban Public Transportation Comp...mentioning

confidence: 99%

Analysis of the Evolutionary Game between the Government and Urban Rail Transit Enterprises under the Loss-Subsidy Mode: A Case Study of Beijing

Chen

Tong

2021

Sustainability

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Most of the urban rail transit enterprises in China have high construction and operation costs, while the government imposes price control on their fares, making their revenues unable to cover their costs and thus causing certain losses. In order to ensure the economic sustainability of urban rail transit enterprises, the government then subsidizes their losses. In the context of loss subsidies as the main subsidy mode for urban rail transit, the government regulates whether urban rail transit enterprises waste cost in order to protect social welfare and reduce the financial pressure of subsidies. This paper constructs an evolutionary game model between government regulators and urban rail transit enterprises, establishes replicated dynamic equations to obtain the evolutionary stabilization strategies of the government and urban rail transit enterprises under different situations, and analyzes the effects of various parameters on the cost control behaviors of urban rail transit enterprises under different loss-subsidy modes through numerical simulations. The theoretical study and simulation results show the following: When only the regulatory policy is adopted, the optimal strategy of urban rail transit enterprises may be cost saving or cost wasting under different subsidy models; if only the penalty policy is adopted, the enterprises will choose the cost wasting strategy when the penalty is small, and the enterprises will choose the cost saving strategy when the penalty is large; if only the fixed proportion subsidy model is adopted, no matter how large the proportion k of government subsidies is, the urban the optimal strategy for rail transit enterprises is cost wasting. If only the regressive loss subsidy model is adopted, the different sizes of its various parameter settings will also lead to the enterprises’ choice of cost wasting strategy or cost saving strategy. Therefore, the government should formulate corresponding policies according to different cost control objectives.

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Indirect production function and the output effect of public transit subsidies

Abstract: Operating subsidy, Capital subsidy, Output effect, Indirect production function, Inefficiency,

Cited by 11 publications

References 33 publications

Bus transit technical efficiency using latent class stochastic indirect production frontier

Bus transit technical efficiency using latent class stochastic indirect production frontier

Examining the Inefficiency of Transit Systems Using Latent Class Stochastic Frontier Models

Analysis of the Evolutionary Game between the Government and Urban Rail Transit Enterprises under the Loss-Subsidy Mode: A Case Study of Beijing

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