This study investigates the efficiency of Norwegian bus companies. The development model permits the consideration of the effects on costs for differences in scale, technological conditions, ownership structure and subsidy policy. The principal findings are that: (i) the average cost function is slightly U-shaped; (ii) there is no statistically significant difference in costs between public and private companies; (iii) companies which are facing a subsidy policy based on cost norms show greater efficiency than bus operators who negotiate with the authorities over the size of the subsidy; and (iv) the efficiency gain by introducing cost norms is significantly higher for companies in public ownership than for privately owned companies. (Author/publisher).
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