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Rail access charges and internal competition in high speed trains

Author

Listed:
  • Oscar ALVAREZ-SANJAIME
  • Pedro CANTOS-SANCHEZ
  • Rafael MONER-COONQUES
  • Jose J. SEMPERE-MONERRIS

Abstract

This paper develops an ex ante analysis of the introduction of on-track competition in High Speed Rail (HSR) lines. The distinctive elements of our analysis are the consideration of: (i) the vertical structure of the rail sector, (ii) operators that compete in prices and number of services, and (iii) access charges for the use of the rail infrastructure that are endogenous. We provide simulation results for three Spanish HSR routes. The socio-economic viability of entry is found to depend on whether infrastructure and rail operations are integrated or separated, and also on the policy rule to set rail access charges. Firstly, separation without entry is not an appropriate good policy: the reduction in prices is followed by a reduction in the number of services that leads to lower consumer surplus and lower industry profits. Secondly, marginal cost pricing, that would entail losses to the infrastructure manager, would make entry profitable because access charges are much lower; welfare gains would be in the range of 6–9% higher than in the pre-entry scenario. This conclusion holds for large increases in rail traffic. Thirdly, the consideration of a more realistic scenario (where the entry of a new operator would lead to a modest rise in the whole rail traffic), while encouraging entry, would imply welfare losses yet consumer surplus would go up as long as access charges are set to marginal cost pricing.
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Suggested Citation

  • Oscar ALVAREZ-SANJAIME & Pedro CANTOS-SANCHEZ & Rafael MONER-COONQUES & Jose J. SEMPERE-MONERRIS, 2016. "Rail access charges and internal competition in high speed trains," LIDAM Reprints CORE 2788, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2788
    Note: In : Transport Policy, 49, 184-195, 2016
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    Cited by:

    1. Shtele, Evgeniia & Beria, Paolo, 2025. "Using synthetic control method to evaluate the effect of a competitor's entry into high-speed rail market," Research in Transportation Economics, Elsevier, vol. 112(C).
    2. Shao, Zeng-Zhen & Ma, Zu-Jun & Sheu, Jiuh-Biing & Gao, H. Oliver, 2018. "Evaluation of large-scale transnational high-speed railway construction priority in the belt and road region," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 117(C), pages 40-57.
    3. Brand, Christina & Sieg, Gernot, 2020. "The impact of delays on the welfare effects of on-track competition: The case of transfer passengers with operator-tied tickets," Research in Transportation Economics, Elsevier, vol. 80(C).
    4. Wang, Yixiao & Pels, Eric & Teunter, Ruud H. & Sun, Luoyi & Wu, Jianhong, 2023. "Railway liberalization, airport congestion toll, and infrastructure pricing: Modelling and numerical analysis for European and Chinese markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 170(C).
    5. Mohsen Momenitabar & Raj Bridgelall & Zhila Dehdari Ebrahimi & Mohammad Arani, 2021. "Literature Review of Socioeconomic and Environmental Impacts of High-Speed Rail in the World," Sustainability, MDPI, vol. 13(21), pages 1-27, November.
    6. Ristić, Bojan & Stojadinović, Nikola & Trifunović, Dejan, 2022. "Conditions for effective on-track competition in the European passenger railway market: A yardstick for regulations," Transport Policy, Elsevier, vol. 119(C), pages 1-15.
    7. Benedetto, Valerio & Smith, Andrew S.J. & Nash, Chris A., 2017. "Evaluating the roles and powers of rail regulatory bodies in Europe: A survey-based approach," Transport Policy, Elsevier, vol. 59(C), pages 116-123.
    8. Wheat, Phill & Smith, Andrew S.J. & Rasmussen, Torris, 2018. "Can competition for and in the market co-exist in terms of delivering cost efficient services? Evidence from open access train operators and their franchised counterparts in Britain," Transportation Research Part A: Policy and Practice, Elsevier, vol. 113(C), pages 114-124.
    9. Álvarez-SanJaime, Óscar & Cantos-Sanchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, Jose J., 2020. "Pricing and infrastructure fees in shaping cooperation in a model of high-speed rail and airline competition," Transportation Research Part B: Methodological, Elsevier, vol. 140(C), pages 22-41.
    10. Li, Hongchang & Yu, Kemei & Wang, Kun & Zhang, Anming, 2019. "Market power and its determinants in the Chinese railway industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 120(C), pages 261-276.
    11. Vigren, Andreas, 2017. "Competition in Swedish passenger railway: Entry in an open access market and its effect on prices," Economics of Transportation, Elsevier, vol. 11, pages 49-59.
    12. Zhang, Xu & Zhang, Wei & Lee, Paul Tae-Woo, 2020. "Importance rankings of nodes in the China Railway Express network under the Belt and Road Initiative," Transportation Research Part A: Policy and Practice, Elsevier, vol. 139(C), pages 134-147.
    13. Álvarez-SanJaime, Óscar & Cantos-Sanchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, Jose J., 2021. "The effect of cooperative infrastructure fees on high-speed rail and airline competition," Transport Policy, Elsevier, vol. 112(C), pages 125-141.
    14. Trifunović, Dejan & Stojadinović, Nikola & Ristić, Bojan & Jovanović, Predrag, 2024. "Investigating the market share convergence and welfare potentials of asymmetric train access charges for the commercial passenger rail services," Research in Transportation Economics, Elsevier, vol. 107(C).
    15. Jiang, Changmin & Wang, Chunan, 2021. "High-speed rail pricing: Implications for social welfare," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    16. Desmaris, Christian & Croccolo, Fabio, 2018. "The HSR competition in Italy: How are the regulatory design and practices concerned?," Research in Transportation Economics, Elsevier, vol. 69(C), pages 290-299.
    17. Jan Thomas Schäfer, 2025. "Upstream vs. downstream grants - The role of public contributions in improving railway efficiency in Europe," MAGKS Papers on Economics 202517, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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