Social efficiency benchmarking of Japanese domestic transport services: A comparison of rail and air

Abstract

The environmental impact of CO 2 emissions has attracted increasing attention in recent years, which has redefined the modal choice between air and rail transport. Transport service provision via railway involves less marginal environmental damage than air transport, yet it entails a higher emissions burden in its infrastructure construction stage. This paper empirically investigates the environmental burden of these two transport modes by taking into account the CO 2 emissions from both transport service provision and infrastructure construction. Using a panel data set from 1999 to 2007 for three Japanese railway companies and the Japanese air transport industry, which are treated as decision-making units (DMUs), this paper estimates the social efficiency of these DMUs via a nonparametric productivity measurement method that incorporates economic bads as undesirable outputs. The aviation industry is shown to be efficient, whereas results for the railway industry are mixed: JR East is efficient, JR West is inefficient throughout the observation period, and JR Tokai substantially improved its efficiency during the period to become an efficient company in 2007.