Assessing the efficiency of travel agencies with a stochastic cost frontier: a Portuguese case study

Abstract

This paper uses an econometric frontier model to evaluate the technical efficiency of a sample of Portuguese travel agencies. The model encompasses a Cobb–Douglas cost frontier approach, with data running from 2000 to 2004, and makes use of financial variables to generate the travel agencies' efficiency scores. We conclude that the efficiency scores are, at best, mixed. A policy is then derived for guiding management teams, as far as this specific sector is concerned. Copyright © 2006 John Wiley & Sons, Ltd.