Ownership forms matter for airport efficiency: A stochastic frontier investigation of worldwide airports

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jue.2008.03.001 Byline: Tae H. Oum (a)(b), Jia Yan (c)(d), Chunyan Yu (a) Keywords: Ownership forms; Airports; Translog cost system; Stochastic frontier; Bayesian approach Abstract: We study the effects of ownership forms on airports' cost efficiency by applying stochastic frontier analysis to a panel data of the world's major airports. Our key findings are: (a) Countries considering privatization of airports should transfer majority shares to the private sector; (b) Mixed ownership of airport with a government majority should be avoided in favor of even 100% government owned public firm; (c) US airports operated by port authorities should consider to transfer ownership/management to independent airport authorities; and (d) Privatization of one or more airports in cities with multiple airports would improve the efficiency of all airports. Author Affiliation: (a) Sauder School of Business, The University of British Columbia, 2053 Main Mall, Vancouver, BC, Canada V6T 1Z2 (b) College of Business, Embry Riddle Aeronautical University, 600 S. Clyde Morris Blvd, Daytona Beach, FL 32114, USA (c) School of Economic Sciences, Washington State University, Hulbert 101, Pullman, WA 99164, USA (d) Faculty of Business, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, PR China Article History: Received 12 April 2007; Revised 3 March 2008