The paper looks at the technical efficiency of Chinese airports using multi-output stochastic input distance function analysis. This method provides a statistical test of scope economies to investigate the contribution of air cargo transport to airport efficiency. Our findings confirm the presence of scope economies in air passenger and air cargo transport among airports in China. We compare and contrast these results with results obtained from single-output stochastic production frontier analysis in which the effect of scope economies is not included. Our results indicate that the presence of scope economies significantly affects the estimation of technical efficiency, thus implying different efficiency rankings among airports in China.
- Scope economies
- Stochastic input distance function
- Technical efficiency