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Long Run Properties of Technical Efficiency in the U.S. Airline Industry

By Discussion Papers, Ila M. Semenick Alam and Robin C. SicklesIla M. Semenick Alam and Robin C. SicklesLong Run Properties Of, Ila M. Semenick Alam and Robin C. Sickles

Abstract

This paper takes an innovative approach to test the relationship between technical efficiency and the market structure hypothesis which states that competitive pressure enhances relative efficiency. DEA and FDH time series of technical efficiency scores, for a panel of 11 US airlines observed quarterly during 1970-1990, are examined for cointegration and convergence. For almost all firm pairs (>90 % for both efficiency measures), the null hypothesis of cointegration cannot be rejected; meanwhile, the null of no cointegration is rejected for approximately one-third of the firm pairs. Furthermore, convergence tests document less dispersion in firm performance over time. These results indicate that the scores move together and, in fact, the firms are becoming more alike one another in terms of efficiency. ZUSAMMENFASSUNG Langfristige Eigenschaften der technischen Effizienz in der US-Luftfahrtindustrie In diesem Beitrag wird ein innovativer Ansatz entwickelt, um die Beziehung zwischen technischer Effizienz und der Marktstrukturhypothese zu überprüfen, die besagt, daß Wettbewerbsdruck die relative Effizienz erhöht. Die DEA- und FDH-Zeitreihen der technischen Effizienz für ein Panel-Datensatz von 11 US-Fluggesellschaften, die währen

Year: 1997
OAI identifier: oai:CiteSeerX.psu:10.1.1.197.7105
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