This chapter examines the airline performance effect arising from collaboration between airlines and high speed railway (HSR). The analysis presents scenario simulations using a…
Abstract
This chapter examines the airline performance effect arising from collaboration between airlines and high speed railway (HSR). The analysis presents scenario simulations using a bi-level model, which takes into account the effect of competition among airlines and HSR. Using real data, we examine the Japanese domestic market and the Japan-based international market: the markets consist of Tokyo Metropolitan Area, Osaka Metropolitan Area, Seoul/Korea, Frankfurt/Germany, Paris/France, London/United Kingdom, and Los Angeles/United States. Analysis of the domestic market assumes airlines and HSR compete against each other, and analysis of the international market assumes airlines only compete with each other. Initially, we conduct performance analysis using a simulation that mimics the current relationship between airlines and HSR. Then we present three scenarios for different combinations of collaboration between airline and HSR based on airline alliances. The results from this exercise are then used to examine the impact of the collaboration on the profits of airlines and HSR, passenger’s utility, and the network design of airlines. Last, we show the potential benefit to airlines – profitability, market share, and demand growth – from the airline-HSR collaboration. Our model shows that in Japan: (1) Airlines can improve their profitability in international operations by the collaboration with HSR when airlines set their hubs so they can connect to HSR; (2) The airline which has a lower unit operating cost than rivals and sets its hubs to connect to HSR can improve its joint profit with HSR through collaboration; (3) Airlines that don’t operate domestic flights and don’t set their hubs to connect to HSR encourage increased fare competition by coordinating with HSR, but their profit decreases. Whether these results are generalizable to other regions should be the subject of future study.
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SpiceJet came out with Big Sale offer in January 2013 in which the company offered 10 lakh air tickets for Rs. 2013 to travellers in Indian domestic civil aviation market. The…
Abstract
SpiceJet came out with Big Sale offer in January 2013 in which the company offered 10 lakh air tickets for Rs. 2013 to travellers in Indian domestic civil aviation market. The promotion, aimed at increasing passenger load factor, generated wide publicity due to unprecedented nature of offer in highly competitive market. The case traces the history of promotions conducted by SpiceJet and examines the different aspects of promotion which become crucial while planning for promotions in service industry.
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R. Färe, S. Grosskopf, F.R. Forsund, K. Hayes and A. Heshmati
This paper seeks to model and compute productivity, including a measure of quality, of a service which does not have marketable outputs – namely public education at the micro…
Abstract
Purpose
This paper seeks to model and compute productivity, including a measure of quality, of a service which does not have marketable outputs – namely public education at the micro level. This application is a case study for Sweden public schools.
Design/methodology/approach
A Malmquist productivity index is employed which allows for multiple outputs or outcomes such as test results and promotions without requiring price data with which to aggregate these outputs. It also allows one to account for inputs such as teachers and facilities as well as proxies for quality of the inputs (e.g. experience of teachers) and outputs. This model generalizes the basic data envelopment analysis (DEA) models – used successfully to measure performance in many educational applications – to the intertemporal case. A way of computing quality and quantity components of overall productivity is employed.
Findings
The case study is an application to the Swedish primary and secondary school system over the 1992 to 1995 period. It was found that quality “matters”, i.e. productivity growth changes when one accounts for quantity.
Research limitations/implications
The data available implied that the specification is restricted to an intermediate production model, i.e. the output data only account for the intermediate outcomes of education like grades and promotions, but not the longer term outcomes related to success in the job market or higher education, which one proposed as a task for future research.
Originality/value
The indices which are computed at the micro level are of value for policy purposes (does investment in quality matter?) and in an evaluation context.
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Ke Wang, Yujiao Xian, Jieming Zhang, Yi Li and Linan Che
This study aims to provide an estimation of carbon dioxide (CO2) emission abatement costs in China’s industry sector during the period of 2006-2010, and additionally provide an…
Abstract
Purpose
This study aims to provide an estimation of carbon dioxide (CO2) emission abatement costs in China’s industry sector during the period of 2006-2010, and additionally provide an ex-post estimation of CO2 abatement cost savings that would be realized if carbon emission permits trading among different industry sectors of 30 provinces in China during the same period were allowed, to answer the question that whether the industrial carbon emission abatement cost can (partially) be recovered from carbon emission trading in China.
Design/methodology/approach
The joint production framework associated with the environmental technology is utilized for formulating the models for estimating abatement costs and simulating emission permits trading scheme. Several data envelopment analysis-based models that could deal with both the desirable and undesirable outputs within the above framework are utilized for abatement cost saving estimation. The weak disposability assumption and variable returns to scale assumption are applied in the modelling.
Findings
In China’s industry sector, during 2006-2010, the estimated CO2 emission abatement cost was 1,842 billion yuan, which accounts for 2.45 per cent of China’s total industrial output value; the emission abatement cost saving from emission permits trading would be 315 billion yuan, which accounts for 17.12 per cent of the emission opportunity abatement cost; and additional 1,065.95 million tonnes of CO2 emission reductions would be realized from emission permits trading, and this accounts for 4.75 per cent of the total industrial CO2 emissions.
Research limitations/implications
The estimation is implemented at the regional level, i.e. the emission permits trading subjects are the whole industry sectors in different Chinese provinces, because of the data limitation in this study. Further estimation could be implemented at the enterprise level to provide a deeper insight into the abatement cost recovery from emission permits trading.
Practical implications
The estimation models and calculation process introduced in this study could be applied for evaluating the efficiency and effectiveness of pollutant emission permits trading schemes from the perspective that whether these market-based abatement policy instruments help to realize the potential abatement cost savings.
Originality/value
To the best of the authors’ knowledge, no study has provided the estimation of CO2 emission abatement cost and the estimation of CO2 abatement cost saving effect from emission permits trading for China’s industry sector. This study provides the first attempt to fill this research gap.
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Rolf Färe, Shawna Grosskopf, Mats Lundström and Pontus Roos
The purpose of this chapter is to suggest a general framework for assessing the efficiency of health care in general, and health care interventions specifically. We begin with a…
Abstract
The purpose of this chapter is to suggest a general framework for assessing the efficiency of health care in general, and health care interventions specifically. We begin with a three-pronged overview of assessing performance in health care which begins with what we call the budget or cost side model relating budgets and costs to treatments. Next we proceed to describing an intermediate outputs specification which relates hospital resources to medical outcomes, and we conclude with a final outcomes model which relates the medical outcomes to patient health outcomes. The third model is illustrated with an application to data from Swedish cataract patients.
Michael Friis Pedersen and Jakob Vesterlund Olsen
– The purpose of this paper is to introduce a novel measure of access to credit suited to estimate the relative change in credit reserves.
Abstract
Purpose
The purpose of this paper is to introduce a novel measure of access to credit suited to estimate the relative change in credit reserves.
Design/methodology/approach
A debt possibility frontier is estimated using data envelopment analysis and the Malmquist index is calculated. The Malmquist index is redubbed the Debt Development index and decomposed into “change in debt capacity” and “change in debt capacity utilization”. Bootstrapping is applied for statistical inference. The method is applied to an unbalanced panel of 92,000 Danish farm accounts from 1996 to 2009.
Findings
The paper finds that credit capacity roughly doubled for Danish farmers over the period, and that utilization of credit capacity generally was proportional to capacity change, utilization being higher for dairy and pig farms, than for crop farms.
Research limitations/implications
Changes in credit reserves may have important implications for risk management practice, investment and technology adoption and related policy issues. The method is limited by the possibility of strategic behavior of lenders during credit cycle busts. In credit cycle booms, the method gives a good basis for the estimates of change in credit reserves.
Practical implications
In a period of increasing credit reserves, risk management institutions are unlikely to develop. Like agricultural policy, access to credit may crowd out market-based risk management.
Originality/value
The study represents a novel application and interpretation of a well-known method.
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Gives an overview of the Australian banking industry, reviews relevant research and analyses productivity changes 1995‐1999 in a panel of 17 banks to assess the effects of…
Abstract
Gives an overview of the Australian banking industry, reviews relevant research and analyses productivity changes 1995‐1999 in a panel of 17 banks to assess the effects of deregulation and the reforms introduced by the Wallis report (1997). Explains the methodology (Malmquist indices calculated by data envelopment analysis) and presents the results, which show a decline of 3.1 per cent in technical efficiency over the period and of 3.5 per cent in the total factor productivity index, although there was an annual productivity growth rate of 1.3 per cent. Discusses the underlying reasons for this, compares productivity changes in individual banks and finds that size makes no difference. Considers the implications for policy makers, describes the industry as having a “limit of deregulation” syndrome and believes that further productivity gains depend on advances in technology.
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Ameni Tarchouna, Bilel Jarraya and Abdelfettah Bouri
This paper aims to determine the opportunity cost borne by US commercial banks to reduce non-performing loans (NPLs) by one unit within the global financial crisis framework.
Abstract
Purpose
This paper aims to determine the opportunity cost borne by US commercial banks to reduce non-performing loans (NPLs) by one unit within the global financial crisis framework.
Design/methodology/approach
To achieve this aim, the authors use the directional output distance function to estimate the technical efficiency while considering NPLs as undesirable output. Then, they estimate the shadow prices of NPLs by using the envelope theorem and solving the revenue function.
Findings
The results indicate that medium-sized banks are the most efficient, while small banks are the most inefficient ones. Moreover, the shadow prices of NPLs of large banks are higher than those of small and medium-sized banks. This implies a more elevated cost when lessening bad loans in large banks. This is more prominent during the crisis given that the shadow prices of NPLs of large banks have risen sharply over that period.
Practical implications
Shadow prices have important managerial implications given that they display the amounts of required reduced revenues to lessen NPLs. Accordingly, banks’ managers are called to reduce these loans by paying more attention when choosing their customers.
Originality/value
With the absence of an observable market price for bad loans in financial literature, the shadow price notion offers an adequate measure to evaluate them. To the best of authors’ knowledge, this is the first study that provides an estimation of the shadow price of NPLs in the US banking sector.
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Technical progress is an important technique within improving China’s comparative advantages, as new and renewable technologies will be beneficial for energy security. Productive…
Abstract
Purpose
Technical progress is an important technique within improving China’s comparative advantages, as new and renewable technologies will be beneficial for energy security. Productive technical progress and green technical innovation are necessary to improve working conditions and productivity of industries. Therefore, the purpose of this paper is to study technical progress in China under such harsh competitive circumstances, as well as types of technical progress that can be promoted, productive technical progress or green technology progress, and how technical progress will affect China’s competitive advantages.
Design/methodology/approach
The authors perform a multi-index multi-factor constitutive model based on a sample of 468 Chinese industries, and divide the industries into four categories.
Findings
The results indicate that there is a “U”-shape relationship between green technology progress and comparative advantages and an inverted “U”-shape relationship between the intensity of market competition and comparative advantages.
Research limitations/implications
China has crossed the inflection point of the “U”-shaped curve. This, coupled with the slowing of economic growth, demonstrates the need for advocating green technology in China to decrease the pollutant discharge. Establishing Chinese national brands within overseas markets and earning a profit through the downstream of production chain enhance China’s international competitiveness.
Originality/value
One of the most original findings of this paper points out that China is faced with a situation in which exports are severely decreased and domestic environment pollution is increased. Vigorous promotion of green technology progress, improvement of the quality and the technical content of exported products, the establishment of national brand within the overseas market, as well as enhancement of China’s international competitiveness, is needed.