Regulated monopolies frontier and cost efficiency of Tunisian public transport

Since 1985, contracts program have been elaborated between Tunisian public authority and public transport monopolies in order to introducing more competition without arraignment contribution of regulation. However, chronic budget deficit of Tunisian public transport industry continues to increase. The objective of this paper is to evaluating the relationship between public transport regulation and cost-efficiency of operators. So, it proposes: first, test of relevant structure of public transport industry, second, evaluation of contribution of regulation in efficiency of operators. To this end, we estimate, firstly, density and size economies of operators in the objective to verify the pertinence of actual monopolistic structure. Secondly, we estimate distortions between regulated and unregulated labour prices and we integrate them in regulated cost frontier to measure real cost-inefficiencies of operators. Our main conclusion is that monopolistic configuration must be retained and the labour price is regulated at a higher level which explains increasing of operating costs and contributes in inefficiency of operators.