Measuring the economic efficiency of producing rural road services

Steven C. Deller, Carl H. Nelson

Research output: Contribution to journalArticle

Abstract

The research reported here examines the ability of a sample of Midwest township officials to produce low-volume rural road services in an economically efficient manner. Farrell-type measures of input use and scale efficiency are reported. Results suggest that over 50% of costs may be unnecessarily incurred because of input use inefficiency. Correlation between output measures and the efficiency measures suggests that larger jurisdictions are more efficient than smaller jurisdictions. In addition, 84.5% of the townships exhibit technology characterized by increasing returns to scale. These results suggest that jurisdictional consolidation of production-related responsibilities may yield substantial cost savings.

Original languageEnglish (US)
Pages (from-to)194-201
Number of pages8
JournalAmerican Journal of Agricultural Economics
Volume73
Issue number1
DOIs
StatePublished - Feb 1991

Keywords

  • Managerial efficiency
  • Rural governments

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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