Reassessing Privatization Strategies 25 Years Later: Revisiting Perry and Babitsky's Comparative Performance Study of Urban Bus Transit Services

Abstract

When assessing contracting out or privatization gains in the area of local government transportation, factors such as the mode of transportation provided, population density, and type of government may be the most infl uential factors in determining the effi ciency and eff ectiveness of a transit agency regardless of whether the service is contracted out or kept in house. Privatization appeals to citizen and politician desires for more cost-eff ective methods of service delivery. For this reason, it is important for public administrators to know when gains can be made by contracting out or privatizing services and when it is better to keep service provision in house. Th is article assesses the viability of contracting out and privatization of transit services. Following up on the 1986 work of James Perry and Timlynn Babitsky, which used data from the early 1980s, the authors revisit whether certain service delivery arrangements are more effi cient and eff ective than others in the provision of transit services. Twenty-fi ve years later, they fi nd results similar to those of Perry and Babitsky's original study. Neither the type of government nor whether an agency contracts out has much impact on the effi ciency and performance of urban bus services. Th e main diff erence between the two studies is that private transit agencies are no longer more effi cient or eff ective than public providers.

Does Performance Management Lead to Better Outcomes? Evidence from the U.S. Public Transit Industry

“…After applying these parameters, our population consisted of 236 transit agencies, which can generally be characterized as agencies that operate small and medium-sized bus transit systems in urbanized areas where they are the lone providers of public transit services. Th is defi nition of our population of interest is consistent with long-standing practice in research regarding performance in the transit industry (Boschken 1992; Leland and Smirnova 2009;Perry and Babitsky 1986;Zullo 2008).…”

Public and Private Production in a Mixed Delivery System: Regulation, Competition and Costs

“…While almost none of the research published before 2000 took competition into account in their empirical analyses (De Borger, Kerstens, & Costa, ), more recent studies have controlled for competition for the contract. Leland and Smirnova () compared the evolution in efficiency and effectiveness of U.S. urban bus services, and found that privately owned and managed transit systems were no longer more efficient and effective providers than government‐owned agencies. They pointed to the lack of competition between contractors and higher transaction costs as factors.…”

Strategy Formulation and Performance

“…collectively, these studies have identified a wide range of transit system characteristics and service operation variables along with service area characteristics and structural variables that influence the performance of local public transit systems. Key variables that have been found to influence aspects of transit system performance include ser-vice area population density (Fielding et al, 1978;leland & Smirnova, 2008), institutional structure, that is, whether special-purpose authority vs. unit of general purpose local government (leland & Smirnova, 2008;Perry & babitsky, 1986), size and scale of operations (brown & thompson, 2008;leland & Smirnova, 2009;Perry & babitsky, 1986), and privatization of service delivery (giuliano, 1981;leland & Smirnova, 2008;Mccullough, taylor, & wachs, 1998;Perry & babitsky, 1986).…”