During the Nineties, the Italian Local Public Transportation (LPT) Industry has been reformed and the subsidisation mechanism to LPT firms has changed over from costplus to fixed-price regimes. The very aim of the reform was to enhance both service effectiveness and firms efficiency. In this paper we analyse a panel of 42 LPT firms observed during the period 1993-
1999, trying to highlight the productivity changes. In particular, we investigate the effects of different subsidisation mechanism (cost-plus vs. fixed-price) on LPT firms efficiency and productivity using the Data Envelopment Analysis. At first we decompose inefficiency, distinguishing among managerial efficiency, scale efficiency and the inefficiency gap linked to the different type of service (urban, extra-urban and mixed). Then we use the Malmquist Index to take into account for the dynamic effects, clarifying the trend of managerial-, scale-, technological-, and type-specific-efficiency. The results show that the efficiency levels are quite variable. Furthermore, we find that the type of service is likely to affect dynamic efficiency. In particular, it seems that firms providing mixed services (both urban and extra-urban) could reach better
dynamic performance in terms of efficiency recovery than those providing only urban or extra-urban service.