Efficiency analysis on bus companies in Seoul city using a network DEA model

This study aims to develop a network Data Envelopment Analysis (DEA) model for evaluating the efficiency of bus companies of Seoul, Korea. The proposed model is formulated by combining a network DEA model with the Banker, Charnes, and Cooper (BCC) model. The model can reflect the non-storable nature of public transportation services by sequentially considering transportation services provided by operators and consumed by users. The model also reflects simultaneously both desirable and undesirable outputs and thus provides more sufficient information with which to evaluate the efficiency of bus companies than the traditional DEA model does. The proposed model is estimated based on data regarding bus companies in the city of Seoul. Findings suggest several policies to improve the efficiency of bus companies, such as expansion of bus rapid transit systems and establishment of additional stops of median bus lanes for express and arterial bus routes. Furthermore, specific tax-cut polices related to environmental issues should be implemented to encourage inefficient bus companies to operate more pro-environmental vehicles. The developed model and criteria can assess the overall efficiency of bus companies and provide direction for the efforts of inefficient bus companies.