THE ECONOMIC-ENVIRONMENT AND PUBLIC-ENTERPRISE BEHAVIOR - BELGIAN RAILROADS, 1950-86

The purpose of this paper is to estimate the impact of variations in t he economic environment on allocatively inefficient behaviour by publi c enterprises, and to measure the implications of both allocative and technical inefficiency for the firm's costs and factor use. Empirical results for the Belgian railroad company suggest the importance of une mployment and the pressure experienced by managers to reduce the defic it as explanatory variables of allocative inefficiency. The implicatio ns of inefficiencies for factor use are found to be substantial, altho ugh the associated costs are quite small.