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The Economics of Railways Restructuring in South Korea

Author

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  • Pittman, Russell
  • Choi, Sunghee

Abstract

South Korea, like many countries, is engaged in a policy debate concerning possible railways reforms. However, unlike most countries, here the focus of discussion has been the government’s proposal to open high-speed passenger train lines to a second train company that would supply on-track competition to KTX trains. While such a policy may indeed lead to lower fares and greater efficiency, worldwide experience casts doubt on the government’s hope that it would lead to such dramatic increases in ridership that the level of subsidies to the overall rail system could be reduced. We argue that a more promising reform strategy may be to introduce competition into freight rail. Based on the Latin American experience, creating independent, vertically integrated, competing freight railway companies could be expected not only to lower shipper rates and increase efficiency but also to raise considerable revenues from the private sector in franchising fees and new investments.

Suggested Citation

  • Pittman, Russell & Choi, Sunghee, 2013. "The Economics of Railways Restructuring in South Korea," MPRA Paper 44992, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:44992
    as

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    File URL: https://mpra.ub.uni-muenchen.de/44992/1/MPRA_paper_44992.pdf
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    References listed on IDEAS

    as
    1. Ivaldi Marc & Mccullough Gerard, 2008. "Subadditivity Tests for Network Separation with an Application to U.S. Railroads," Review of Network Economics, De Gruyter, vol. 7(1), pages 1-13, March.
    2. Christian Growitsch & Heike Wetzel, 2006. "Economies of Scope in European Railways: An Efficiency Analysis," IWH Discussion Papers 5, Halle Institute for Economic Research.
    3. Chris Nash & Jan-Eric Nilsson & Heike Link, 2013. "Comparing Three Models for Introduction of Competition into Railways," Journal of Transport Economics and Policy, University of Bath, vol. 47(2), pages 191-206, May.
    4. Antonio Estache & Andrea Goldstein & Russell Pittman, 2001. "Privatization and Regulatory Reform in Brazil: The Case of Freight Railways," Journal of Industry, Competition and Trade, Springer, vol. 1(2), pages 203-235, June.
    5. Fumitoshi Mizutani & Shuji Uranishi, 2013. "Does vertical separation reduce cost? An empirical analysis of the rail industry in European and East Asian OECD Countries," Journal of Regulatory Economics, Springer, vol. 43(1), pages 31-59, January.
    6. Dani Rodrik, 2007. "Introductiion to One Economics, Many Recipes: Globalization, Institutions, and Economic Growth," Introductory Chapters,in: One Economics, Many Recipes: Globalization, Institutions, and Economic Growth Princeton University Press.
    7. Christian Growitsch & Heike Wetzel, 2009. "Testing for Economies of Scope in European Railways: An Efficiency Analysis," Journal of Transport Economics and Policy, University of Bath, vol. 43(1), pages 1-24, January.
    8. Nash, Chris & Nilsson, Jan-Eric & Link, Heike, 2011. "Comparing three models for introduction of competition into railways – is a Big Wolf so Bad after all?," Working papers in Transport Economics 2011:19, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    railways; restructuring; competition; South Korea;

    JEL classification:

    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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