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Competition in the railway passenger market: The challenge of liberalization

Author

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  • Carlos Gutiérrez-Hita

    (Universidad Miguel Hernandez de Elche, Universidad Antonio de Nebrija, Spain)

  • Aurora Ruiz-Rua

    (Universidad Antonio de Nebrija, Spain)

Abstract

European country members have been opening up to competition railway passenger services in recent years, whereas others still remain on the way to liberalization. The recent Commission’s fourth European Union (EU) Railway Package has updated the European legislation to ensure an effective liberalization within the EU country members by 2020. It is intended to enhance firms’ efficiency and also consumers’ benefits. In this article, we study different paths towards liberalization from the traditional state-owned monopoly configuration. First, the monopoly outcome is presented, as it is the current situation in a number of EU country members. Second, the oligopoly models are introduced to study different paths towards an effective competition as a result of different market configurations. It is found that liberalization may enhance consumer surplus keeping operators’ profitability only when variable costs and access charge to the network are low. Finally, some regulatory measures are discussed.

Suggested Citation

  • Carlos Gutiérrez-Hita & Aurora Ruiz-Rua, 2019. "Competition in the railway passenger market: The challenge of liberalization," Competition and Regulation in Network Industries, , vol. 20(2), pages 164-183, June.
    • Handle: RePEc:sae:crnind:v:20:y:2019:i:2:p:164-183
    DOI: 10.1177/1783591719858737
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    References listed on IDEAS

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    Cited by:

    1. Kristijan Solina & Borna Abramović, 2022. "Effects of Railway Market Liberalisation: European Union Perspective," Sustainability, MDPI, vol. 14(8), pages 1-15, April.

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