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Chinese Railway Reform and Competition: Vertical or Horizontal Restructuring?

Author

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  • Russell Pittman

    (Antitrust Division US Department of Justice)

Abstract

One of the key determinants of China's ability to continue its economic growth into the 21stcentury and to distribute the benefits of that growth to a broad spectrum of the population will be the further development of its railroad system. This paper examines the possibilities for improving the performance and increasing the capacity of China's railroad system through the introduction of competition. Countries throughout the world are in the process of abandoning the centralized, monopoly, state-owned model of the railway in favor of models that create competition. However, different competitive models have been proposed and are being tried out. This paper discusses the reform experience with the two basic models and their variations, focusing especially on some of the operational and regulatory challenges that vertical separation is now better understood to impose. It seeks to apply the lessons of the experience to date to the situation of China, where -- unlike in many countries, developing and developed -- one important criteria for choosing a reform model is its ability to provide the incentives for appropriate levels of new investment to be undertaken at the appropriate locations. The paper closes with the presentation of one possible reform model for the Chinese rail system, a model that maintains vertical integration while creating competition for shippers at many important origin and destination points.

Suggested Citation

  • Russell Pittman, 2002. "Chinese Railway Reform and Competition: Vertical or Horizontal Restructuring?," Development and Comp Systems 0204004, EconWPA.
  • Handle: RePEc:wpa:wuwpdc:0204004
    Note: Type of Document - ; prepared on PC; pages: 26 ; figures: 4 maps included at end of paper
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    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. Michael G. Pollitt & Andrew S. J. Smith, 2002. "The restructuring and privatisation of British Rail: was it really that bad?," Fiscal Studies, Institute for Fiscal Studies, vol. 23(4), pages 463-502, December.
    3. Pittman, Russell W, 1990. "Railroads and Competition: The Santa Fe/Southern Pacific Merger Proposal," Journal of Industrial Economics, Wiley Blackwell, vol. 39(1), pages 25-46, September.
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    8. Bitzan, John, 2000. "Railroad Cost Conditions: Implications for Policy," UGPTI Department Publication 231804, North Dakota State University, Upper Great Plains Transportation Institute.
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    More about this item

    Keywords

    China railroad infrastructure reform competition;

    JEL classification:

    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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