EFFICIENCY IN THE PRODUCTION OF RURAL ROAD SERVICES - THE CASE OF NEW-ENGLAND TOWNS

An analysis of size and managerial efficiency of northern New England towns in the production of rural road services is reported. A stochast ic cost frontier was used as the normative efficiency reference set. E mpirical results provide evidence of economies of size in the producti on of road service in New England and that size inefficiencies are pre sent. Results also suggest that managerial inefficiencies, or input us e inefficiencies, are present and costs may be 40 percent higher than necessary. At issue is the effectiveness of current institutional arra ngements: small town governments may best match local demand with serv ices, but at high cost.