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Fixed Effects Estimation of Marginal Railway Infrastructure Costs in Sweden

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Abstract

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.

Suggested Citation

  • Andersson, Mats, 2007. "Fixed Effects Estimation of Marginal Railway Infrastructure Costs in Sweden," Working Papers 2007:11, Swedish National Road & Transport Research Institute (VTI).
  • Handle: RePEc:hhs:vtiwps:2007_011
    Note: This paper replaces 2006:6.
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    File URL: http://www.transportportal.se/SWoPEc/MA_Fixed_effects.pdf
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    1. 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, University of Bath, vol. 38(2), pages 157-190, May.
    2. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    3. 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.
    4. Johansson, Per & Nilsson, Jan-Eric, 2004. "An economic analysis of track maintenance costs," Transport Policy, Elsevier, vol. 11(3), pages 277-286, July.
    5. Chris Nash, 2005. "Rail Infrastructure Charges in Europe," Journal of Transport Economics and Policy, University of Bath, vol. 39(3), pages 259-278, September.
    6. 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.
    7. 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.
    8. Zvi Griliches, 1972. "Cost Allocation in Railroad Regulation," Bell Journal of Economics, The RAND Corporation, vol. 3(1), pages 26-41, Spring.
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    Cited by:

    1. repec:eee:ecotra:v:10:y:2017:i:c:p:8-17 is not listed on IDEAS
    2. 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.
    3. Odolinski , Kristofer & Smith , Andrew S.J., 2014. "Assessing the cost impact of competitive tendering in rail infrastructure maintenance services: evidence from the Swedish reforms (1999-2011)," Working papers in Transport Economics 2014:17, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

    More about this item

    Keywords

    Railway; Infrastructure operation; Maintenance; Renewal; Marginal costs; Fixed effects;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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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