Productivity Change and the Effects of the Enhancement of the Mass Transportation Programme on the Bus Transit System in Taiwan

Abstract

The main objective of this article is to analyse the changes in productivity of the Taiwan Bus Transit System (TBTS) before and after the execution of the ‘Alternatives for Promoting the Development of the Public Transportation Sectors’ (APDPTS), which is designed to provide a better operating environment for the public transport sector in the provision of public transit services. We use a decomposition of the Malmquist productivity index to locate the sources of productivity growth, namely technical change and efficiency change. The former is further decomposed into an output bias, an input bias and a magnitude term to test neutrality. The latter is also decomposed into changes in pure technical efficiency and scale efficiency. In our case, between the pre‐ and post‐APDPTS periods, the efficiency increased only marginally. As a result of a five‐year enhancement programme, the technical regress slowed down slightly, and inward neutral shifts of a transformation frontier were interpreted as being the main contributor to technical regress. In particular, evidence of biased technical change was found, i.e., the effects of output capability increased slightly, but the efficient use of inputs declined during the post‐APDPTS period.