Efficiency and productivity analysis of the interstate bus transportation industry in Brazil

Abstract

Productivity analysis is an important policy making and managerial control tool for assessing the degree to which inputs are utilized in the process of obtaining desired outputs. Data Envelopment Analysis (DEA) is a non-parametric method based on piecewise linear frontiers estimated with the aid of mathematical programming techniques and used, in this paper, to investigate technical, scale and managerial efficiencies associated with interstate bus companies in Brazil (ISBT). Data has been obtained from the web-site of the Brazilian National Agency of Land Transportation (ANTT). Since production factors in the application are constrained by technical and operational reasons, weight restrictions were introduced into the DEA models. The analysis has shown three groups of non-efficient bus firms, with clear differences in productivity. The relative managerial efficiencies of the firms in the non-efficient groups were also computed and analyzed. Finally, an example of benchmarking a nonefficient firm with DEA is presented.