Looking Beyond Europe with a Special Focus on Japan

This chapter summarizes regulatory structure and reforms in the rail industry in non-European countries. I have selected four regions-East Asia, Oceania, North America, and the former socialist countries-with Japan, Australia, he United States and Russia chosen for each region, respectively. Although the structure of the rail industry in all four countries will be summarized, this chapter focuses on Japan because its rail regulatory structure is quite different from that of European countries. Because of its differences from others, the experience of regulatory reforms in Japan could provide useful lessons for policy makers and practitioners in Europe. One distinctive feature of regulation in Japan is its relative moderation. Second, competition policy is different: instead of direct competition for rail track, a yardstick regulation (or competition) scheme is applied to the rail industry in Japan, resulting in indirect competition (i.e. competition among different rail service markets). Third, most rail operators are privately owned in Japan. Fourth, as for structure, rail operation and infrastructure are integrated. Of course, there are cases in Japan of vertical separation, but the purpose of vertical separation in these cases is quite different from that in Europe. Finally, in Japan passenger services are dominant, and freight services are more limited than in Europe. This chapter consists of the following five sections. In the second section, I will briefly describe regulation and regulatory reforms, market structure and competition policy in the four chosen countries above mentioned. After the second section, by focusing on Japan, I will discuss regulation policy and competition policy. Beginning with the third section, I will explain the situation in Japan, focusing on entry and fare regulations. The fourth section will cover regulatory reforms in Japan since 1987. In this section, after a description of major regulatory changes, there will be a summary of the 2004 privatization of Eidan, now called Tokyo Metro. In the fifth section, competition policy in Japan will be discussed. The yardstick regulation scheme as a competition tool will be explained and its effects discussed. The sixth section will contain an explanation of Japanese-style unbundling policy. The four types of unbundling will be described, and the purposes and characteristics of each type will be explained. The seventh section will discuss possible lessons for European railways based on the results of the previous sections. The last section summarizes the points made in this chapter.