Regulatory Design and Technical Efficiency: Public Transport in France

Public transport systems are often subject to a close regulatory oversight because of their economic and social impacts. In the case of France, this has led to an institutional design that has involved the participation of private rms in the service provision, and the use of incentive contracts to regulate them, among other characteristics. We study the eect of these institutional features on the eciency of the rms in the sector. For this, we use nonparametric Data Envelopment Analysis (DEA) techniques to estimate the input usage eciency, and explore a few potential institutional and regulatory determinants. We apply a conditional DEA approach and xed eects second stage regressions to control for potentially observed and unobserved sources of heterogeneity across dierent environments in which the rms operate. Our results point to a dierential eect of private and mixed public-private companies. In particular, having the performance of public operators as the benchmark, eciency is relatively higher for private rms, but lower when the service is delegated to a mixed public-private rm. Furthermore, the eects seem to diverge greatly by contract type when the rm is mixed so that, when the contract is of the cost reimbursement type, performance is lower than the public rm benchmark, while for other contract types there are no statistically signicant dierences. Keywords: Data Envelopment Analysis (DEA); Conditional eciency measures; Twostage eciency analysis; Regulation; Public transport JEL Classication: C14; L32; L51; L91