What lessons can be learned from cost efficiency? The case of Swedish district courts

Abstract

AbstractMany studies have reported findings regarding technical efficiency (i.e., resource use) for district courts around the world. However, our review of previous research did not find any studies targeting cost efficiency. To fill this gap, this study investigates the cost efficiency of Swedish district courts. We apply the Farrell framework and decompose cost efficiency into allocative and technical efficiency. The study finds substantial cost inefficiency for district courts in Sweden, which is mainly due to allocative inefficiency (i.e., having the wrong input mix or paying too much for inputs). This result is not surprising since, for example, there is regional heterogeneity in input prices (i.e., wages and rents). However, it also reveals the potential of, for example, moving district courts out of city centres and high-priced areas. On the other hand, the location and staffing of district courts serve other competing policy concerns, such as the proximity of citizens to district courts. The cost-efficiency analysis gives information about the cost of these competing policy concerns.