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Efficiency evaluation in municipal services: an application to the street lighting service in Spain

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Abstract

Efficiency evaluation is very important in the municipal realm because of its impact on the people’s standard of living. However, in most cases the value of public output is hardly significant, and therefore measurement is necessarily limited to estimating technical efficiency, which is calculated using physical inputs and outputs. A major part of municipal services can be provided through different types of public management. This plurality of options lends greater relevance to the evaluation. This paper analyzes efficiency in the public street lighting service in Spanish towns, by means of DEA methodology, pursuing two objectives: to estimate the technical efficiency achieved and to discover whether differences in efficiency can be explained by the type of management, that has been chosen, whether public or private. The results of the analysis allow us to confirm that there is a significant relationship between the variables defined as inputs into the process and efficiency. However, the relationship is not very significant for the variables considered as outputs, in some cases. It was also detected that the factors defining the characteristics of the environment and the type of management, whether public or private, do not have a statistically significant impact on efficiency levels.

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Notes

  1. According to statistics of the Ministry of Public Works (2000).

  2. With reference to the DEA technique, Golany and Roll (op. cit., p. 246) affirm that any element that has a negative effect on output should be transformed through its inverse.

  3. These can be seen at http://www.imac.org

  4. A broad overview of the bibliography regarding DEA can be found in Emrouznejad (2001).

  5. Banker et al. (2004) defend that the DEA technique is the best estimator of efficiency in cases of heteroscedasticity.

  6. The DEA efficiency index is calculated using the Frontier Analyst program, a computer package which requires the use of the CCR and BCC formulations and is generally used in studies by public entities. Likewise, the STATA.9 software was used for the various econometric analyses.

  7. To do so, we utilized FEAR 1.0: a software package for Frontier Efficiency Analysis with R (http://www.eco.utexas.edu/faculty/Wilson/Software/FEAR).

  8. This estimation of the relationship between variables is recommended by Banker (1992) and Norman and Stoker (1991), as well as others.

  9. Selection of the CCR formulation in the preliminary stages of variables selection was performed in accordance with the agreement existing in the literature on applying the most restrictive DEA (Golany and Roll op. cit., p. 240).

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Authors and Affiliations

  1. Facultad de Economía y Empresa, Universidad de Salamanca, Campus Universitario Miguel de Unamuno, Edificio FES, 37007, Salamanca, Spain

    José Manuel Prado Lorenzo & Isabel María García Sánchez

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  1. José Manuel Prado Lorenzo
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  2. Isabel María García Sánchez
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Correspondence to José Manuel Prado Lorenzo.

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Lorenzo, J.M.P., Sánchez, I.M.G. Efficiency evaluation in municipal services: an application to the street lighting service in Spain. J Prod Anal 27, 149–162 (2007). https://doi.org/10.1007/s11123-007-0032-z

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