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The marginal cost of track reinvestments in the Swedish railway network: Using data to compare methods

Author

Listed:
  • Odolinski, Kristofer

    (CTS - Centre for Transport Studies Stockholm (KTH and VTI))

  • Yarmukhamedov, Sherzod

    (The Swedish National Audit Office)

  • Nilsson , Jan-Eric

    (CTS - Centre for Transport Studies Stockholm (KTH and VTI))

  • Haraldsson, Mattias

    (CTS - Centre for Transport Studies Stockholm (KTH and VTI))

Abstract

In this study, we analyze the difference between survival and corner solution models in estimating the marginal cost of reinvestments. Both approaches describe the reinvestment process in rather intuitively similar ways but have several methodological distinctions. We use Swedish railway data on track segment and section levels over the period 1999-2016 and focus on reinvestments in track superstructure. Results suggest the marginal costs from survival and corner solution models are SEK 0.0041 and SEK 0.0103, respectively. The conclusion is that the corner solution model is more appropriate, as this method consider the impact traffic has on the risk of reinvestment as well as on the size of the reinvestment cost. The survival approach does not consider the latter, which is problematic when we have systematic variations in costs due to traffic and infrastructure characteristics.

Suggested Citation

  • Odolinski, Kristofer & Yarmukhamedov, Sherzod & Nilsson , Jan-Eric & Haraldsson, Mattias, 2018. "The marginal cost of track reinvestments in the Swedish railway network: Using data to compare methods," Working papers in Transport Economics 2018:20, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    • Handle: RePEc:hhs:ctswps:2018_020
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    References listed on IDEAS

    as
    1. Andersson, Mats & Smith, Andrew & Wikberg, Åsa & Wheat, Phill, 2012. "Estimating the marginal cost of railway track renewals using corner solution models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(6), pages 954-964.
    2. Andersson, Mats & Björklund, Gunilla, 2012. "Marginal railway track renewal costs: a survival data approach," Working papers in Transport Economics 2012:29, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    3. Johansson, Per & Nilsson, Jan-Eric, 2004. "An economic analysis of track maintenance costs," Transport Policy, Elsevier, vol. 11(3), pages 277-286, July.
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    More about this item

    Keywords

    railways; reinvestment; renewal; survival model; corner solution model; two-part model; marginal cost;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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