Technical Efficiency of European Metro Systems: The Effects of Operational Management and Socioeconomic Environment

Abstract

This study focuses on the relationship between the operational performance of metro systems and their socioeconomic contexts. We use a two-stage methodology applied to a sample of 17 European metro systems. First, we apply a stochastic frontier approach to establish the optimal production function and to evaluate the efficiency and effectiveness levels of each firm through offer and demand-characterizing indicators, respectively. Only internal production factors are included in the first stage of this analysis. In a second stage, we use a similar modeling approach, but considering an additional set of variables characterizing the socioeconomic environment of the urban areas in which metro systems operate. This method allows observing the effects on operational performance measurements due to the inclusion of external factors, and consequently, drawing some conclusions on the technical efficiency of metro systems and their operations in beneficial or adverse surrounding environments. Different scores resulting from both perspectives evidence the contributions of the socioeconomic factors to improve the reliability of performance measurements and to reduce false inefficiencies. The results show that 12 of the analyzed systems are being affected by an unfavourable socioeconomic environment and/or their network suffers from some adequacy problems with regard to demand. The remaining five systems should improve their management strategies, since their results are being supported by a favourable surrounding environment.