This paper is an empirical application of the distance function to study the allocative efficiency of a regulated railway firm, RENFE, where the cost minimising hypothesis may be questioned. The distance function, which is the dual of the cost function, completely describes the technology and,...

In this paper we present a new empirical model based on an input distance function, from which estimates of allocative inefficiency and its cost can be obtained. The model avoids the Greene problem, which refers to the difficulty in practice of using a cost system to separate economic...