Causes of inefficiency in Japanese railways: Application of DEA for managers and policymakers

Toshiya Jitsuzumi, Akihiro Nakamura

Research output: Contribution to journalArticle

25 Citations (Scopus)

Abstract

Although railway services have been suffering financially due to modal shifts and aging populations, they have been, and will continue to be, an essential component of nations' basic social infrastructures. Since railway firms generate positive externalities, and are required to operate in pre-determined licensed areas, governmental intervention/support may, in some cases, be justified. Indeed, many types of subsidies are created and offered for railway operations in Japan; while some are meant to cover large investments, others are used as compensation for regional disparities. However, thus far, no attempt has been made to analyze the reasons for the underperformance of Japanese railway services. In other words, it is unclear whether this underperformance can be attributed to exogenous and uncontrollable causes, or endogenous phenomena and, hence, capable of being handled by managers. The optimal degree of intervention is thus not sufficiently known. In the current paper, we propose a method based on data envelopment analysis (DEA) to analyze the causes of inefficiency in Japanese railway operations, and, further, to calculate optimal subsidy levels. The latter are designed to compensate for railways' lack of complete discretion in changing location of their operations and/or increasing/decreasing these operations since they are a regulated service. Our proposed method was applied to 53 Japanese railway operators. In so doing, we identified several key characteristics related to their inefficiencies, and developed optimal subsidies designed to improve performance.

Original languageEnglish
Pages (from-to)161-173
Number of pages13
JournalSocio-Economic Planning Sciences
Volume44
Issue number3
DOIs
Publication statusPublished - Sep 1 2010

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data envelopment analysis
Data Envelopment Analysis
Railway
railway
German Federal Railways
data analysis
manager
cause
subsidy
social infrastructure
aging population
Externalities
Essential Component
Inefficiency
Managers
Politicians
Data envelopment analysis
Japan
Continue
Infrastructure

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Economics and Econometrics
  • Strategy and Management
  • Statistics, Probability and Uncertainty
  • Management Science and Operations Research

Cite this

Causes of inefficiency in Japanese railways : Application of DEA for managers and policymakers. / Jitsuzumi, Toshiya; Nakamura, Akihiro.

In: Socio-Economic Planning Sciences, Vol. 44, No. 3, 01.09.2010, p. 161-173.

Research output: Contribution to journalArticle

Jitsuzumi, Toshiya ; Nakamura, Akihiro. / Causes of inefficiency in Japanese railways : Application of DEA for managers and policymakers. In: Socio-Economic Planning Sciences. 2010 ; Vol. 44, No. 3. pp. 161-173.
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