IDEAS home Printed from https://ideas.repec.org/p/iso/wpaper/0131.html
   My bibliography  Save this paper

Competition Effects in a Liberalized Railway Market

Author

Listed:
  • Markus Lang

    () (Institute for Strategy and Business Economics, University of Zurich)

  • Marc Laperrouza

    () (Management of Network Industries, Swiss Federal Institute of Technology Lausanne (EPFL))

  • Matthias Finger

    () (Management of Network Industries, Swiss Federal Institute of Technology Lausanne (EPFL))

Abstract

This paper presents a game-theoretic model of a liberalized railway market, in which train operation and ownership of infrastructure are vertically separated. We analyze how the regulatory agency will optimally set the charges that operators have to pay to the infrastructure manager for access to the tracks and how these charges change with increased competition in the railway market. Our analysis shows that an increased number of competitors in the freight and/or passenger segment reduces prices per kilometer and increases total output in train kilometers. The regulatory agency reacts to more competition with a reduction in access charges in the corresponding segment. Consumers benefit through lower prices, while individual profits of each operator decrease through a higher number of competitors. We further show that the welfare effect of increased competition in the freight and/or passenger segment is ambiguous and depends on the level of competition. Finally, social welfare is higher under two-part tariffs than under one-part tariffs if raising public funds is costly to society.

Suggested Citation

  • Markus Lang & Marc Laperrouza & Matthias Finger, 2010. "Competition Effects in a Liberalized Railway Market," Working Papers 0131, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Apr 2011.
  • Handle: RePEc:iso:wpaper:0131
    as

    Download full text from publisher

    File URL: http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/131_ISU_full.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Laffont, Jean-Jacques & Tirole, Jean, 1994. "Access pricing and competition," European Economic Review, Elsevier, vol. 38(9), pages 1673-1710, December.
    2. Thorsten Beckers & Christian von Hirschhausen & Fabian Haunerland & Matthias Walter, 2009. "Long-Distance Passenger Rail Services in Europe: Market Access Models and Implications for Germany," OECD/ITF Joint Transport Research Centre Discussion Papers 2009/22, OECD Publishing.
    3. Armstrong, Mark & Vickers, John, 1998. "The Access Pricing Problem with Deregulation: A Note," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 115-121, March.
    4. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-150, June.
    5. Chris Nash & Tom Sansom, 2001. "Pricing European Transport Systems: Recent Developments and Evidence from Case Studies," Journal of Transport Economics and Policy, University of Bath, vol. 35(3), pages 363-380, September.
    6. Link, Heike & Nilsson, Jan-Eric, 2005. "Infrastructure," Research in Transportation Economics, Elsevier, vol. 14(1), pages 49-83, January.
    7. Chris Nash, 2005. "Rail Infrastructure Charges in Europe," Journal of Transport Economics and Policy, University of Bath, vol. 39(3), pages 259-278, September.
    8. Nash, Chris, 2008. "Passenger railway reform in the last 20 years - European experience reconsidered," Research in Transportation Economics, Elsevier, vol. 22(1), pages 61-70, January.
    9. John Vickers, 1995. "Competition and Regulation in Vertically Related Markets," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 1-17.
    10. Armstrong Mark, 2008. "Access Pricing, Bypass and Universal Service in Post," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-16, June.
    11. Russell Pittman, 2003. "Vertical Restructuring (or Not) of the Infrastructure Sectors of Transition Economies," Journal of Industry, Competition and Trade, Springer, vol. 3(1), pages 5-26, March.
    12. Freebairn, John, 1998. "Access Prices for Rail Infrastructure," The Economic Record, The Economic Society of Australia, vol. 74(226), pages 286-296, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eee:transb:v:107:y:2018:i:c:p:167-191 is not listed on IDEAS

    More about this item

    Keywords

    Access charges; optimal pricing; railways; regulation; vertical integration;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iso:wpaper:0131. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IBW IT). General contact details of provider: http://edirc.repec.org/data/isuzhch.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.