Estimating Public Library Efficiency Using Stochastic Frontiers

This article uses public libraries to analyze public sector cost-efficiency. The growth of large bookstores and the Internet in recent years may have motivated libraries to behave in a more cost-efficient manner. Alternatively, monitoring of libraries may have decreased as patrons shift away from library use, increasing inefficiency. Using a stochastic cost frontier, the level of cost-inefficiency is estimated and analyzed. The results suggest that competition, regardless of the source, does not have a large effect on cost-efficiency. Local government spending decreases inefficiency in smaller libraries, consistent with the monitoring role governments can have on public spending.