Cost efficiency of African airports using a finite mixture model |
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Authors: | Carlos Pestana Barros |
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Institution: | 1. Instituto Superior de Economia e Gestão, Technical University of Lisbon Rua Miguel Lupi, 20, 1249-078 Lisbon, Portugal;2. UECE (Research Unit on Complexity and Economics), Technical University of Lisbon Rua Miguel Lupi, 20, 1249-078 Lisbon, Portugal;3. CESA (Center for African and Development Studies), Technical University of Lisbon Rua Miguel Lupi, 20, 1249-078 Lisbon, Portugal |
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Abstract: | This paper evaluates the operational activities of African airports using a finite mixture model that allows us to control for unobserved heterogeneity. In doing so, a stochastic frontier latent class model, which allows for the existence of different technologies, is adopted to estimate cost frontiers. This procedure not only enables us to identify different groups of African airports analysed from Angola and Mozambique, but also permits the analysis of their cost efficiency. The main result is that three groups are identified in the sample, each equipped with completely different “technologies”, suggesting that distinct business strategies need to be adapted to the characteristics of the airports. Some managerial implications are developed. |
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