Persistence and dynamics in the efficiency of toll motorways: The Spanish case

Abstract

This study performs an empirical analysis of the productive efficiency of toll motorway concessionaire companies in Spain. We estimate a dynamic stochastic frontier model using an input-oriented distance function for 30 concessionaires during the 2003–2015 period. Considering a multi-output production technology with light and heavy vehicles, we estimate an autoregressive dynamic specification under a Bayesian framework that acknowledges persistence in firm efficiency due to adjustment costs. Our results reveal: (i) large persistence in productive inefficiency in the toll motorway sector, (ii) technical change from 2006 onwards, and (iii) increasing returns to scale. We derive both short- and long-run inefficiency estimates and document that long-run inefficiency increases with the number of stretches a firm manages; however, inefficiency is unrelated to the political authority that grants the concession. We also find that the marginal cost of light vehicle-kilometres is about half that for heavy vehicles.