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Regulation and efficiency: the case of European railways

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  • Cantos, Pedro
  • Maudos, Joaqui­n

Abstract

During the long period of regulation of the railway system in Europe (1950s-1990s) the companies notably improved their levels of productivity. However, parallel to this, the state of their financial accounts also significantly worsened. In order to explain this fact we have estimated both cost and revenue frontier functions, calculating the losses associated with both cost and revenue inefficiencies as well as inefficiencies on the cost side. The results obtained show the existence of significant potential losses of revenue, which can be explained above all by the strong policy of regulation and intervention reigning in this period. A better commercial policy and a supply adapted to market conditions seem to be two unavoidable requisites for the future of European rail policy if the companies' financial burdens are to be reduced.

Suggested Citation

  • Cantos, Pedro & Maudos, Joaqui­n, 2001. "Regulation and efficiency: the case of European railways," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(5), pages 459-472, June.
  • Handle: RePEc:eee:transa:v:35:y:2001:i:5:p:459-472
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    References listed on IDEAS

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    Cited by:

    1. Subal Kumbhakar & Luis Orea & Ana Rodríguez-Álvarez & Efthymios Tsionas, 2007. "Do we estimate an input or an output distance function? An application of the mixture approach to European railways," Journal of Productivity Analysis, Springer, vol. 27(2), pages 87-100, April.
    2. Jose Vassallo & Mark Fagan, 2007. "Nature or nurture: why do railroads carry greater freight share in the United States than in Europe?," Transportation, Springer, vol. 34(2), pages 177-193, March.
    3. Sanchez Rodrigues, Vasco & Beresford, Anthony & Pettit, Stephen & Bhattacharya, Syamantak & Harris, Irina, 2014. "Assessing the cost and CO2e impacts of rerouteing UK import containers," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 53-67.
    4. Tsekouras, Kostas & Chatzistamoulou, Nikos & Kounetas, Kostas & Broadstock, David C., 2016. "Spillovers, path dependence and the productive performance of European transportation sectors in the presence of technology heterogeneity," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 261-274.
    5. Mallikarjun, Sreekanth & Lewis, Herbert F. & Sexton, Thomas R., 2014. "Operational performance of U.S. public rail transit and implications for public policy," Socio-Economic Planning Sciences, Elsevier, vol. 48(1), pages 74-88.
    6. repec:spr:annopr:v:259:y:2017:i:1:d:10.1007_s10479-016-2190-8 is not listed on IDEAS
    7. Abate, Megersa & Lijesen, Mark & Pels, Eric & Roelevelt, Adriaan, 2013. "The impact of reliability on the productivity of railroad companies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 51(C), pages 41-49.
    8. Jain, Priyanka & Cullinane, Sharon & Cullinane, Kevin, 2008. "The impact of governance development models on urban rail efficiency," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(9), pages 1238-1250, November.
    9. repec:eee:transa:v:106:y:2017:i:c:p:12-21 is not listed on IDEAS
    10. Finger, Matthias, 2014. "Governance of competition and performance in European railways: An analysis of five cases," Utilities Policy, Elsevier, vol. 31(C), pages 278-288.
    11. Antonio Couto & Daniel Graham, 2008. "The contributions of technical and allocative efficiency to the economic performance of European railways," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 7(2), pages 125-153, August.
    12. Bogart, Dan, 2010. "A global perspective on railway inefficiency and the rise of state ownership, 1880-1912," Explorations in Economic History, Elsevier, vol. 47(2), pages 158-178, April.
    13. José Manuel Pastor Monsálvez & Lorenzo Serrano Martínez & Pedro Cantos, 2002. "Cost And Revenue Inefficiencies In The European Railways," Working Papers. Serie EC 2002-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    14. Ana Rodríguez Álvarez & Víctor Fernández Blanco & José Baños Pino, 2005. "El efecto de la regulación sobre la eficiencia productiva: una aplicación a las compañías ferroviarias europeas," Investigaciones Economicas, Fundación SEPI, vol. 29(2), pages 351-378, May.
    15. Mette Asmild & Torben Holvad & Jens Hougaard & Dorte Kronborg, 2009. "Railway reforms: do they influence operating efficiency?," Transportation, Springer, vol. 36(5), pages 617-638, September.
    16. repec:eee:trapol:v:58:y:2017:i:c:p:53-61 is not listed on IDEAS
    17. Canuto, Otaviano & Lima, Gilberto Tadeu & Alexandre, Michel, 2003. "Investimentos externos em serviços e efeitos potenciais da negociação da ALCA," Estudios y Perspectivas – Oficina de la CEPAL en Brasilia 2, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    18. Gertjan Driessen & Mark Lijesen & Machiel Mulder, 2006. "The impact of competition on productive efficiency in European railways," CPB Discussion Paper 71, CPB Netherlands Bureau for Economic Policy Analysis.
    19. Fumitoshi Mizutani & Shuji Uranishi, 2013. "Does vertical separation reduce cost? An empirical analysis of the rail industry in European and East Asian OECD Countries," Journal of Regulatory Economics, Springer, vol. 43(1), pages 31-59, January.
    20. Fumitoshi Mizutani & Andrew Smith & Chris Nash & Shuji Uranishi, 2015. "Comparing the Costs of Vertical Separation, Integration, and Intermediate Organisational Structures in European and East Asian Railways," Journal of Transport Economics and Policy, University of Bath, vol. 49(3), pages 496-515, July.
    21. Bougna, Emmanuel & Crozet, Yves, 2016. "Towards a liberalised European rail transport: Analysing and modelling the impact of competition on productive efficiency," Research in Transportation Economics, Elsevier, vol. 59(C), pages 358-367.
    22. Miguel Urdánoz & Catherine Vibes, 2013. "Regulation and cost efficiency in the European railways industry," Journal of Productivity Analysis, Springer, vol. 39(3), pages 217-230, June.

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