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Privatisation of Deutsche Bahn AG - with or without the rail network?

Author

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  • Horst Friedrich
  • Christian Böttger

Abstract

At the end of September the German Bundestag will, in all probability, decide on the sale of Deutsche Bahn, the German Railway. The privatisation of the railway will likely be carried out together with the rail network. Horst Friedrich, FPD Bundestag parliamentary party, argues that a separation of the transport companies and the infrastructure is the better solution, since "the separation of transport and the rail network will be most beneficial for the federal budget". In addition, in his opinion, the separation will lead to clean structures at the interface of government and business and thus allow an optimal perception of the government's responsibility for the infrastructure: However, since considerable resistance to the separation of the network and operations has become evident, Friedrich favours a variation of the so-called proprietary model as a possible compromise. Here the ownership of the rail network by Deutsche Bahn AG would be transferred to an enterprise owned by the federal government. Deutsche Bahn AG would receive, for a fee, the right to the further control of the rail network within the framework of an incentive-oriented performance and financing agreement. Also Christian Böttger, University of Applied Sciences (FHTW) Berlin, argues against an integrated initial public offering. "The success of an integrated initial public offering seems commercially dubious, and a stock market offering with the present structure would also make little free-market sense. It would lead to continuous market disturbances and to a unwise distribution of opportunities and risks between owners and the public sector.

Suggested Citation

  • Horst Friedrich & Christian Böttger, 2006. "Privatisation of Deutsche Bahn AG - with or without the rail network?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(13), pages 03-08, July.
  • Handle: RePEc:ces:ifosdt:v:59:y:2006:i:13:p:03-08
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    JEL classification:

    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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