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Track wear-and-tear cost by traffic class: Functional form, zero output levels and marginal cost pricing recovery on the French rail network

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Author Info
Marc Gaudry
Emile Quinet
Abstract

We address the issue of the allocation of railway track maintenance (wear-and-tear) costs to traffic output classes and consider a very general function relating maintenance cost C to a set of technical production characteristics K used to produce traffic output vector T. We neglect other rail cost categories, such as traffic control and track renewal. The data base pertains to over 1 500 sections of the French rail infrastructure in 1999, representing about 90% of the total network of 30 000 km of lines in regular service. In addition to the maintenance cost C, it provides by track section 15 technical characteristics (both state S and quality Q) and 4 train traffic outputs T. Input prices, assumed to be uniform in space, disappear from the analysis, as in other national cross-sectional cases. With database subsets of approximately 1 000 observations, several functional forms are tested: Linear, Log-Log, trans-Log and generalized Box-Cox. All are embedded in an unrestricted extension (U-GBC) of Khaled's seminal restricted generalized Box-Cox (R-GBC) functional specification. The U-GBC architecture, compared with its 4 principal nested variants, turns out to be by far the most appropriate, in particular when some observed zero Traffic sample values are included _an issue rather neglected previously in the literature.It appears that several technical characteristics, such as maximum allowed speed and number of switches, are highly significant maintenance cost factors, which gives a hint that derived marginal costs are short term; also, the relation between maintenance costs and traffic is non linear and differs significantly by train category. Implications of different specifications for marginal infrastructure cost charges by traffic type are outlined.

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Paper provided by PSE (Ecole normale supérieure) in its series PSE Working Papers with number 2009-32.

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Date of creation: 2009
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Handle: RePEc:pse:psecon:2009-32

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