This paper evaluates cost efficiency and some of its managerial
determinants in Germany’s local public transport. A heteroscedastic
Stochastic Frontier approach reveals that a high degree of tramcar utilisation
and a high outsourcing degree influence the efficiency predictions positively.
Mean efficiencies lie between 0.849 and 0.952, depending on the applied
panel data models accounting for unobserved heterogeneity and observed
heterogeneous output variables for tram, light railway and metro services.
The inefficiency levels correspond to a savings potential between 1.40 and
4.43 bn EUR based on the 28.23 bn EUR total costs (in 2006 prices) for 254
observations of 39 companies 1997-2006.