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Fixed Effects Estimation of Marginal Railway Infrastructure Costs in Sweden

New railway legislation in Sweden has increased the need for transparent access charges on the Swedish railway network. We estimate cost functions for infrastructure operation, maintenance and renewal in the Swedish national railway network, using unobserved effects models and calculate marginal costs for railway infrastructure wear and tear. We find evidence of unobserved fixed effects at a track section level for infrastructure operation and maintenance costs. The estimated weighted average marginal infrastructure operation cost is SEK 0.12 per train kilometre and the estimated marginal maintenance cost is SEK 0.0073 per gross tonne kilometre. Altogether, the results indicate that the current charge for railway infrastructure wear and tear in Sweden is below marginal cost.

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File URL: http://www.transportportal.se/SWoPEc/MA_Fixed_effects.pdf
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Paper provided by Swedish National Road & Transport Research Institute (VTI) in its series Working Papers with number 2007:11.

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Length: 28 pages
Date of creation: 25 Apr 2007
Date of revision:
Handle: RePEc:hhs:vtiwps:2007_011
Note: This paper replaces 2006:6.
Contact details of provider: Postal: VTI, Transport Economics, P.O. Box 6056, SE-171 06 Solna, Sweden
Phone: +46-13-20 40 00
Fax: +46-13-14 14 36
Web page: http://www.vti.se/tek
Email:


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  1. Chris Nash, 2005. "Rail Infrastructure Charges in Europe," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 39(3), pages 259-278, September.
  2. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  3. Zvi Griliches, 1972. "Cost Allocation in Railroad Regulation," Bell Journal of Economics, The RAND Corporation, vol. 3(1), pages 26-41, Spring.
  4. Nash, Chris, 2003. "Marginal cost and other pricing principles for user charging in transport: a comment," Transport Policy, Elsevier, vol. 10(4), pages 345-348, October.
  5. Johansson, Per & Nilsson, Jan-Eric, 2004. "An economic analysis of track maintenance costs," Transport Policy, Elsevier, vol. 11(3), pages 277-286, July.
  6. Kennedy, J. & Smith, A.S.J., 2003. "Assessing the efficient cost of sustaining Britain’s rail network: perspectives based on Zonal comparisons," Cambridge Working Papers in Economics 0317, Faculty of Economics, University of Cambridge.
  7. John Kennedy & Andrew S. J. Smith, 2004. "Assessing the Efficient Cost of Sustaining Britain's Rail Network: Perspectives based on Zonal Comparisons," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 38(2), pages 157-190, May.
  8. Berndt, Ernst R. & Christensen, Laurits R., 1973. "The translog function and the substitution of equipment, structures, and labor in U.S. manufacturing 1929-68," Journal of Econometrics, Elsevier, vol. 1(1), pages 81-113, March.
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