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Separability and Subadditivity in Australian Railways

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  • NICK WILLS‐JOHNSON

Abstract

Economic reform in the mid‐1990s saw the application of third‐party access to railway infrastructure and, in some cases, the separation of above‐rail and below‐rail services into separate businesses. Reform was based on the notion that the rail track was a natural monopoly, while the above‐rail sector could potentially support competition. This paper examines the likelihood of such competition through an analysis of subadditivity, and also the consequences of vertical separation for rail efficiency. It finds limited evidence for sustainable above‐rail competition, but also limited evidence that vertical separation should have caused efficiency losses.

Suggested Citation

  • Nick Wills‐Johnson, 2008. "Separability and Subadditivity in Australian Railways," The Economic Record, The Economic Society of Australia, vol. 84(264), pages 95-108, March.
    • Handle: RePEc:bla:ecorec:v:84:y:2008:i:264:p:95-108
    DOI: 10.1111/j.1475-4932.2008.00449.x
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    References listed on IDEAS

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    Cited by:

    1. Gary Madden & Jeffrey Petchey & Aaron Morey, 2011. "Recent Australian Infrastructure Liberalization," Chapters, in: Matthias Finger & Rolf W. Künneke (ed.), International Handbook of Network Industries, chapter 26, Edward Elgar Publishing.
    2. Pittman, Russell, 2011. "Risk-averse restructuring of freight railways in China," Utilities Policy, Elsevier, vol. 19(3), pages 152-160.
    3. Fumitoshi Mizutani & Shuji Uranishi, 2013. "Does vertical separation reduce cost? An empirical analysis of the rail industry in European and East Asian OECD Countries," Journal of Regulatory Economics, Springer, vol. 43(1), pages 31-59, January.
    4. Wills-Johnson, Nick, 2008. "The Productivity of Australia’s Railways in the 20th Century," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 47(2).

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