Efficiency Gains from Port Reform and the Potential for Yardstick Competition: Lessons from Mexico

SUMMARY This paper shows how measures of relative efficiency performance could promote yardstick competition between port infrastructure operators. The illustration is based on a study of the efficiency effects of the Mexican 1993 Port Reform. It covers the 1996-1999 period and relies on a stochastic production frontier to show that Mexico's ports achieved 2.8-3.3% average annual efficiency gains since reform. The port specific measures point to consistent leaders and laggards which would not all be identified by common partial productivity indicators. This information could be built into an explicit incentive based regulatory regime aiming at promoting catch-up by laggards.