Cost efficiency of listed highway enterprises in China

This paper applies the stochastic frontiers model proposed by Battese and Coelli (1995) to simultaneously estimate the stochastic cost function and equation of inefficiency for 19 listed highway enterprises in China from 2001 to 2005. The major findings are as follows: The costal location provides a significant cost efficiency advantage than the inland. An increase in scale of the enterprise significantly improves cost efficiency, showing the scale of economy. The average cost efficiency scores are low but generally improving in the sample period.