Summary

The 1996 new legislation concerning the partial deregulation of bus industry led to a major structural change in the whole industry in Taiwan and provide a new framework for all bus operation. This dissertation has studied the effects of privatization and regulatory changes in the public transport industry, with special reference to changes in efficiency and/or effectiveness. On one hands, the TMTC’s privatization programme offers a unique opportunity to analyze the effects on the efficiency changes of its kind. On the other hand, a number of long established operators, most of them are so-called multimode transit firms, seem to have worked effectively, and still survives following deregulation. Therefore there is a requirement to examine carefully transit performance based on the concepts of efficiency and/or effectiveness.

This dissertation is composed of four stand-alone essays which deal with four crucial but often neglected issues concerning transit performance, with particular reference to Taiwanese bus transit industry. The first two essays pertain to the impact of privatization on bus firm’s efficiency and talk about to what extent the various efficiency changes before and after privatization.

The last two essays shift the focus from investigating the influence of privatization on the transit firm to the efficiency measurement of some transportation organizations which engage in various activities (services) simultaneously, such as multimode bus transit.

Specifically, four research objectives corresponding to four essays are addressed in this dissertation, respectively.

First, measure the “return to the dollar” at the station-level of TMTC before and after privatization and decompose it into technical and allocative efficiency indexes, and then estimate further the price distortions by allocative efficiency which using data on observed costs and revenues without requiring explicit informance on prices, unlike that traditional approach does.

Second, apply a model which incorporates both desirable and undesirable outputs to examine the impact of privatization experienced by the TMTC. And transport risks as undesirable outputs are taken into account to measure the overall risk-adjusted efficiency changes.

Third, explore the efficiency of individual services within different but highly homogeneous multimode transit firms which engage in their various services with non-identical technologies and use shared inputs.

And lastly, fill a void in the literature by presenting a model that allows a representation of both production and consumption technologies in a unified framework, and hence can be used to simultaneously estimate the cost efficiency, service effectiveness and cost effectiveness of multimode transit firms which carry out their services with non-identical technologies using common inputs.

This dissertation discussed several methods of efficiency and/or effectiveness analysis finding both their effectiveness and limitations in the four case studies. The first essay is to describe a case study in which a hyperbolic graph efficiency approach is applied to measure

“return to the dollar” at the station-level of TMTC before and after privatization. The “return to the dollar” measure is decomposed into two components: a technical efficiency index and allocative efficiency index. Price distortions are measured by allocative efficiency using data on observed costs and revenues without requiring explicit information on prices.

A directional distance function which incorporates both desirable and undesirable outputs is employed in the second essay to investigate the impact of privatization experienced by the TMTC. For the first time, transport risk is treated as a joint but undesirable output to measure efficiency changes following privatization.

In the third essay of the dissertation, the multiactivity DEA model is applied to explore the efficiency of individual services within different but highly homogeneous multimode transit firms in Taiwan, due to its being designed, in particular, to estimate the efficiency achieved by organizations which face several production functions using shared inputs.

Following Fare and Grosskopf (1996, 2002), the fourth essay presents an approach to include both the unstorable characteristics of transportation service and the technological differences within multimode transit firms in efficiency and effectiveness measurement. The proposed network DEA model differs from conventional models in two respects: First, the consumed services occurring concurrently with the produced services are explicitly taken into account, and second, the network model allows a representation of both production and consumption technologies in a unified framework and hence can be used to simultaneously esitimate the cost efficiency, the service effectiveness and the cost effectiveness of multimode transit firms which carry out their services with non-identical technologies and use shared inputs.

The proposed network DEA model is applied to production and consumption data for a sample of multimode bus transit firms in Taiwan. Of the 60 bus companies in Taiwan, 24 of them operated both highway bus services (HB) and urban bus services (UB) in 2001. This is a novel assessment of transit performance using a network DEA model as compared to methodologies used in a variety of previous studies on transit systems.

There are two categories of sample data used in this dissertation. First, data used in the first two essays come from both TMTC and KKTC’s annual statistical reports and accounts and are supplemented by further data requested from both operators. Since both TMTC and GGBE were undoubtedly undergoing a degree of “privatization turmoil,” characterized by a fundamental shake-up, changing business or working practices, and employees entering and leaving firms, the data for the year of privatization (i.e., 2001) are excluded to avoid any possible bias. In addition, no significant reforms appear to have taken after the year of structural changes in KKTC. Therefore, this study uses TMTC station-level data in the period of 2000 and KKTC data for 2002. Second, as for the last two essays, the indicator data to be used in the measurement of efficiency in Taiwan’s bus transit system is a sample of 24 firms, all long established operators and located all over the island in 2001. All these DMUs operated both HB and UB. A system which provided only either HB or UB is excluded. All data used in the multiactivity DEA model were obtained from the annual statistical reports published by the National Federation of Bus Passenger Transportation of the Republic of China for 2002.

The main results of this dissertation based on the four case studies are as follows.

First, the decomposition results indicated that both technical and allocative efficiencies contribute to the growth of “return to the dollar”, with the allocative component playing a more important role than the technical component. Perhaps in an attempt to cover the inefficiency-induced losses, both the public and private firms apparently resort to distorting relative output prices with respect to input prices, and the distortion is more pronounced in the

private firm than in the public firm. A statistically significant increase in technical efficiency took place following privatization, implying that the private firm converted input resources into output more effectively than its predecessor.

Second, using a directional output distance function which incorporates both desirable and undesirable output to investigate the impact of privatization experienced by the TMTC, the empirical results demonstrate that TMTC’s privatization has produced a distinct improvement in efficiency enhancement and as such may be considered to be a source of cost reductions.

Third, to determine the efficiency of individual services within different but highly homogeneous multimode transit firms which engage in their services with non-identical technologies and use shared inputs. The empirical findings indicate that the multiactivity model is more demanding than the conventional DEA model and thereby shows itself to be an especially useful instrument in performing this task.

Fourth, subsequent to previous results, the results obtained from the network model compared to those of a conventional model are quite different in terms of the number of efficient or effective units, rank comparisons of DMUs performance as well as inter-related effects. Generally speaking, the network model is more demanding than the conventional model.