Reference : Measuring Quantity-Quality Trade-Offs in Regulation: the Brazilian Freight Railways Case
Scientific journals : Article
Business & economic sciences : Economic systems & public economics
Measuring Quantity-Quality Trade-Offs in Regulation: the Brazilian Freight Railways Case
Estache, Antonio [> >]
Perelman, Sergio mailto [Université de Liège - ULg > HEC-Ecole de gestion de l'ULg : UER > Economie publique appliquée >]
Trujillo, Lourdes [> >]
Annals of Public and Cooperative Economics = Annales de l'Economie Publique, Sociale et Coopérative
Blackwell Publishing
Yes (verified by ORBi)
[en] The quantity vs. quality trade-offs in network industries are well known from the theoretical literature and have been the subject of many empirical assessments, although mostly for the telecoms and energy sectors. The purpose of this paper is to expand the evidence for the railway sector by documenting the importance of this trade-off in the context of the Brazilian freight railway industry reform, the first example of a railway sector in which tariff revisions are subject to joint output and quality performance indicators. The analysis is based on the calculation of the Malmquist productivity index proposed by Fare et al. (1995). The decomposable nature of this total factor productivity (TFP) index reveals the prevalence of quantity-quality trade-offs up to the end of the reform period, but a positive correlation between them during the period just afterwards. This type of information would certainly be useful for regulation purposes, particularly as an alternative way of taking into account quality without introducing complex, and very often ineffective, penalty schemes.
Centre de Recherche en Économie Publique et de la Population - C.R.E.P.P

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