Abstract
The authors analyze 925 town highway departments in New York to determine potential economies from consolidation and the degree of cost efficiency. Only 15% of departments would reduce costs by merging, resulting in an average 13% reduction in expenditures. In addition, all of the towns are cost inefficient by an average 17%. Size economies are estimated using a log quadratic stochastic frontier regression model. The estimated cost curve is a textbook U shape with a mean cost elasticity of 0.97, indicating that most towns are operating at the minimum point of the curve. The composed error model is used to estimate cost inefficiency, which is not systematically linked to size inefficiency. However, 14 very small departments are quite cost inefficient.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
