Estimating allocative efficiency in port authorities with demand uncertainty

Hidalgo, Soraya and Núñez-Sánchez, Ramón (2012): Estimating allocative efficiency in port authorities with demand uncertainty.

Abstract

This paper aims to analyse the impact of port demand variability on the allocative efficiency of Spanish port authorities during the period 1986-2007. From a distance function model we can obtain a measure of allocative efficiency using two different approaches: error components approach and parametric approach. We model the variability of port demand from the cyclical component of traffic series by applying the Hodrick-Prescott filter. The results show that the inclusion of variability does not affect the efficiency measures, except in the case of containerised general cargo. Moreover, we demonstrate that port authorities have excess capacity and their resources are misallocated. Finally we establish that the allocative inefficiency of Spanish port authorities is difficult to resolve given the limited substitution possibilities among the different pairs of inputs.

• Item Type: MPRA Paper
• Language: English
• Keywords: allocative efficiency; distance function; demand variability; Hodrick-Prescott filter; ports
• Subjects: L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L32 - Public Enterprises ; Public-Private Enterprises; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R5 - Regional Government Analysis > R53 - Public Facility Location Analysis ; Public Investment and Capital Stock; L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L92 - Railroads and Other Surface Transportation; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R48 - Government Pricing and Policy; D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity

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