Economies of Scope in European Railways: An Efficiency Analysis
AbstractIn the course of railway reforms at the end of the last century, European na- tional governments, as well the EU Commission, decided to open markets and to separate railway networks from train operations. Vertically integrated railway com- panies argue that such a separation of infrastructure and operations would diminish the advantages of vertical integration and would therefore not be suitable to raise economic welfare. In this paper, we conduct a pan-European analysis to investi- gate the performance of European railways with a particular focus on economies of scope associated with vertical integration. We test the hypothesis that integrated railways realize economies of joint production and, thus, produce railway services on a higher level of efficiency. To determine whether joint or separate production is more efficient we apply an innovative Data Envelopment Analysis super-efficiency bootstrapping model which relates the efficiency for integrated production to a vir- tual reference set consisting of the separated production technology and which is applicable to other network industries as energy and telecommunication as well. Our findings are that for a majority of European Railway companies economies of scope exist.
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Bibliographic InfoPaper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 29.
Length: 25 pages
Date of creation: Jul 2006
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Efficiency; Vertical Integration; Railway Industry;
Other versions of this item:
- Christian Growitsch & Heike Wetzel, 2006. "Economies of Scope in European Railways: An Efficiency Analysis," IWH Discussion Papers 5, Halle Institute for Economic Research.
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-12 (All new papers)
- NEP-COM-2006-08-12 (Industrial Competition)
- NEP-EEC-2006-08-12 (European Economics)
- NEP-EFF-2006-08-12 (Efficiency & Productivity)
- NEP-NET-2006-08-12 (Network Economics)
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