INFLUENCE OF THE THREE LINKS AGREEMENT ON THE BEHAVIOR OF TAIWAN AIRPORTS: A TWO-STAGE DEA ANALYSIS

Abstract

Taiwan is a small island with a relatively large number of airports. These airports show great disparity in terms of passenger volume and cargo tonnage. This paper in the first part evaluates the efficiency and productivity of Taiwanese airports using a panel data set, to verify the ones with lower efficiency performances. DEA (Data Envelopment Analysis) and Malmquist index methods are applied. In the second stage the changes of these scores are analyzed in different regression methods to test the influence of the Three Link agreement between China and Taiwan. It reveals that airports in Taiwan with routes to China have lower efficiency scores but their productivity grows faster than that of the other airports. This paper also confirmed that airports on offshore islands have higher efficiency scores and productivity.