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Neither market nor hierarchy—coordination costs in the allocation of track capacity in the Swedish railway network

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  • Gunnar Alexandersson
  • Matts Andersson
  • Anders Bondemark
  • Staffan Hultén

Abstract

Transaction costs have been an issue since the advent of the deregulation of the European railway markets in the 1990s. Transaction cost economics received renewed attention in research on the deregulated railway markets in the EU after the publications of two influential reports in the early 2010s. In this article, we develop a model that enables classification and measurement of transaction costs and other coordination costs in deregulated markets. This model is then used to analyze the costs of path allocation in the Swedish railway sector and to compare the results with findings in previous research. We also discuss the economic rationale of the distribution of coordination costs among the involved parties. Our key empirical findings are that the total coordination costs in the Swedish market‐mimicking path allocation process are as low as or lower than the most cost‐efficient market coordination processes studied in railway markets, and that the state administrations take on nearly all the coordination costs in order to minimize the effects of opportunism, rent‐seeking and information impactedness. Another finding is that the size of the coordination costs found by different studies seems to be dependent on whether a bottom‐up or a top‐down approach is used.

Suggested Citation

  • Gunnar Alexandersson & Matts Andersson & Anders Bondemark & Staffan Hultén, 2023. "Neither market nor hierarchy—coordination costs in the allocation of track capacity in the Swedish railway network," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(1), pages 221-239, March.
    • Handle: RePEc:bla:annpce:v:94:y:2023:i:1:p:221-239
    DOI: 10.1111/apce.12381
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    References listed on IDEAS

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    1. Merkert, Rico, 2010. "Changes in transaction costs over time - The case of franchised train operating firms in Britain," Research in Transportation Economics, Elsevier, vol. 29(1), pages 52-59.
    2. Rico Merkert & Andrew S. J. Smith & Chris A. Nash, 2012. "The Measurement of Transaction Costs - Evidence from European Railways," Journal of Transport Economics and Policy, University of Bath, vol. 46(3), pages 349-365, September.
    3. Williamson, Oliver E, 1999. "Public and Private Bureaucracies: A Transaction Cost Economics Perspective," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 306-342, April.
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