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Options for Restructuring the State-Owned Monopoly Railway

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  • Pittman, Russell

Abstract

Vertical separation in the freight railways sector may sacrifice significant economies of integration. Economies of density suggest that corresponding benefits may be elusive. We examine competitive alternatives to vertical separation. One option is the creation of competition among restructured vertically integrated railways, an option generally limited to relatively large countries absent willingness to create multinational railway networks. Second is the opening of the infrastructure of the integrated railway to access by train operating companies. Rarely are the benefits of separation of train from track likely to be so great as to outweigh the losses from the vertical separation itself.

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  • Pittman, Russell, 2007. "Options for Restructuring the State-Owned Monopoly Railway," Research in Transportation Economics, Elsevier, vol. 20(1), pages 179-198, January.
  • Handle: RePEc:eee:retrec:v:20:y:2007:i:1:p:179-198
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    References listed on IDEAS

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    1. Ivaldi Marc & Mccullough Gerard, 2008. "Subadditivity Tests for Network Separation with an Application to U.S. Railroads," Review of Network Economics, De Gruyter, vol. 7(1), pages 1-13, March.
    2. Pittman, Russell W, 1990. "Railroads and Competition: The Santa Fe/Southern Pacific Merger Proposal," Journal of Industrial Economics, Wiley Blackwell, vol. 39(1), pages 25-46, September.
    3. Victor S. Clark, 1908. "Australian Economic Problems. I. The Railways," The Quarterly Journal of Economics, Oxford University Press, vol. 22(3), pages 399-451.
    4. Buehler, Stefan & Schmutzler, Armin & Benz, Men-Andri, 2004. "Infrastructure quality in deregulated industries: is there an underinvestment problem?," International Journal of Industrial Organization, Elsevier, vol. 22(2), pages 253-267, February.
    5. Antonio Estache & Andrea Goldstein & Russell Pittman, 2001. "Privatization and Regulatory Reform in Brazil: The Case of Freight Railways," Journal of Industry, Competition and Trade, Springer, vol. 1(2), pages 203-235, June.
    6. Ivaldi, M & McCullough, G J, 2001. "Density and Integration Effects on Class I U.S. Freight Railroads," Journal of Regulatory Economics, Springer, vol. 19(2), pages 161-182, March.
    7. Russell Pittman, 2004. "Russian Railways Reform and the Problem of Non-discriminatory Access to Infrastructure," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(2), pages 167-192, June.
    8. Vickerman, Roger, 2004. "Maintenance incentives under different infrastructure regimes," Utilities Policy, Elsevier, vol. 12(4), pages 315-322, December.
    9. Jamasb, Tooraj, 2006. "Between the state and market: Electricity sector reform in developing countries," Utilities Policy, Elsevier, vol. 14(1), pages 14-30, March.
    10. Pittman Russell, 2005. "Structural Separation to Create Competition? The Case of Freight Railways," Review of Network Economics, De Gruyter, vol. 4(3), pages 1-16, September.
    11. Russell Pittman, 2003. "Vertical Restructuring (or Not) of the Infrastructure Sectors of Transition Economies," Journal of Industry, Competition and Trade, Springer, vol. 3(1), pages 5-26, March.
    12. MacDonald, James M, 1989. "Railroad Deregulation, Innovation, and Competition: Effects of the Staggers Act on Grain Transportation," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 63-95, April.
    13. Christian Growitsch & Heike Wetzel, 2006. "Economies of Scope in European Railways: An Efficiency Analysis," Working Paper Series in Economics 29, University of Lüneburg, Institute of Economics.
    14. Oliver E. Williamson, 1976. "Franchise Bidding for Natural Monopolies -- in General and with Respect to CATV," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 73-104, Spring.
    15. Jean-Jacques Laffont, 2004. "Management of Public Utilities in China," Annals of Economics and Finance, Society for AEF, vol. 5(2), pages 185-210, November.
    16. Wilson, Wesley W, 1997. "Cost Savings and Productivity in the Railroad Industry," Journal of Regulatory Economics, Springer, vol. 11(1), pages 21-40, January.
    17. Russell Pittman, 2004. "Chinese Railway Reform and Competition: Lessons from the Experience in Other Countries," Journal of Transport Economics and Policy, University of Bath, vol. 38(2), pages 309-332, May.
    18. John D. Bitzan, 2003. "Railroad Costs and Competition: The Implications of Introducing Competition to Railroad Networks," Journal of Transport Economics and Policy, University of Bath, vol. 37(2), pages 201-225, May.
    19. Luisa Affuso & David Newbery, 2002. "The Impact of Structural and Contractual Arrangements on a Vertically Separated Railway," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 83-92.
    20. James M. MacDonald, 1987. "Competition and Rail Rates for the Shipment of Corn, Soybeans, and Wheat," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 151-163, Spring.
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    Cited by:

    1. Beria, Paolo & Quinet, Emile & de Rus, Gines & Schulz, Carola, 2012. "A comparison of rail liberalisation levels across four European countries," Research in Transportation Economics, Elsevier, vol. 36(1), pages 110-120.
    2. José A. Gómez-Ibáñez, 2016. "Open Access to Infrastructure Networks: The Experience of Railroads," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(2), pages 311-345, September.
    3. Nash, Chris A. & Smith, Andrew S.J. & van de Velde, Didier & Mizutani, Fumitoshi & Uranishi, Shuji, 2014. "Structural reforms in the railways: Incentive misalignment and cost implications," Research in Transportation Economics, Elsevier, vol. 48(C), pages 16-23.
    4. Russell Pittman, 2009. "Competition Issues in Restructuring Ports and Railways, Including Brief Consideration of these Sectors in India," EAG Discussions Papers 200906, Department of Justice, Antitrust Division.
    5. Waters II, William G., 2007. "Evolution of Railroad Economics," Research in Transportation Economics, Elsevier, vol. 20(1), pages 11-67, January.
    6. R. Pittman, 2009. "Railway Mergers and Railway Alliances: Competition Issues and Lessons for Other Network Industries," Competition and Regulation in Network Industries, Intersentia, vol. 10(3), pages 259-279, September.
    7. Abbott, Malcolm & Cohen, Bruce, 2016. "The privatization and de-privatization of rail industry assets in Australia and New Zealand," Utilities Policy, Elsevier, vol. 41(C), pages 48-56.
    8. Li, Yan & Pittman, Russell, 2012. "The proposed merger of AT&T and T-Mobile: Are there unexhausted scale economies in U.S. mobile telephony?," MPRA Paper 39043, University Library of Munich, Germany.

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