period 1994 to 1999 after privatization exclusively. In both, freight and passenger transportation sectors, most companies reached high rates of productivity growth, 5.3% and 9.8% on average, respectively. And, as in the case of Brazil’s privatization, this increase is mainly concentrated on the output side. These results are globally confirmed by Estache et al (2004) with more recent data for Brazil.

Third, the literature also provides some useful insight on the timing of the efficiency effects of reform. In particular, Estache et al. (2001) also show that the major gains in efficiency realized by freight companies in Argentina and Brazil were achieved in the first year of operation. They also find that toward the end of the period efficiency drops for all the operators monitored. This tends to confirm the expectations derived from the use of price cap regimes with regular tariff revisions.

Fourth, the paper by Rivera-Trujillo compares the performance of the main North and Latin American railway systems and finds that between 1980 and 1999, the South lagged the North significantly on all efficiency counts. Particularly interesting is the observation that it also lagged the North in terms of the internalization of technological change. On average also, for that continent and during that period, technological change was higher than technical efficiency change.

Fifth, the recent paper by Estache, Trujillo and Perelman (2004) points to the importance of an integrated approach in dealing with safety and output concerns in the regulation of railway service. They do so by modeling an interesting innovative feature of the Brazilian “privatization” intended to ensure a close monitoring of the quantity-quality trade-off. With a price cap regime in the background, the privatization team spelled out, for each concession, two specific targets about output and safety, in terms of minimum net ton-kilometers carried each year and maximum number of accidents per trainkilometer during the first five years. The modeling approach relies on a non-parametric (DEA) index, introduced by Färe et al. (1995), which shows how operators chose between output and quality. The most relevant results reported in Estache et al. (2004) show that the contribution of quality, represented by safety and speed indicators, to productivity change was negative during the public management and transition periods, - 0.7% and –2.3% a year, respectively, while it contributed positively to productivity change, 3.9% a year, during the last period after the reform. In other words, private operators have improved efficiency in terms of both quantity and quality.

Finally, the various papers covering large sets of countries providing both passenger and freight services provide useful insights on the relevance of the size of the network and the complexity of the operations. One of the main results in Mbangala and Perelman (1997) for instance is that on average, small companies and companies operating proportionally higher shares of passenger transport perform better.

# **4. The measurement of efficiency for regulators is a competitive business**

It may be useful in this survey to point out that the market of efficiency measures for regulators is much more competitive than often assumed. Stochastic or deterministic frontiers or DEAs are not the only game in town. There is indeed an increasing presence 19