Measuring of production efficiency in the European railways

Throughout this research, efficiency levels of the European railway industry are analyzed using non‐parametric methods. A sample of 21 companies is used, in the timeframe of 1984‐1995. The aim of the paper is the analysis of the influence on these firms’ efficiency of organizational change due to their adaptation to the environment in which they operate. This environment has been modified as a consequence of the EU directive 91/440/CEE, which mandates the split of the organizational structure of railway companies in two: operation and infrastructure. Results of this paper state clearly that a major part of the technical efficiency of European railway companies is a consequence of scale inefficiencies. In other words, due to mistakes in the size election. Besides, we have proved that technically efficient companies are those of small size. As a conclusion, we should recommend smaller sizes for the big European railway companies, if they are to improve their technical efficiency.