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Assessing the railways subsidy in selected European countries: insights from the Italian case

Author

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  • Arrigo, Ugo
  • Di Foggia, Giacomo

Abstract

This paper is aimed at analysing state aid to the railway sector in the Western countries of the European Union. Although this is a preliminary exercise, literature lacks of specificity. From the analysis, a highly differentiated situation in Europe emerges: a group of countries with permanently lower subsidies (the Iberians, the Scandinavians and Austria); a group of countries with a medium level of subsidies (all of the major countries: Germany, France and the UK) and a group of countries with permanently high subsidies (Italy, Denmark, Belgium and the Netherlands). This paper demonstrates that railways have so far benefited from weakened forms state aid control. This can be motivated (i) by the need for modal rebalance recognised by national transport policies, (ii) by the natural monopolistic character of the network whose duplication is not economically feasible and (iii) by the non-competitive traditional structure, from a legal point of view, of even the transport service. This situation, however, is set to change drastically with the opening up of services to competition, which has already been done in the European Union for the freight sector and in some countries, although only on a voluntary basis, even for the passenger sector. By focusing on Italy, this study finds that the elevated state aid to the rail sector consequently results in both a major public finance problem and a potential factor of competition distortion.

Suggested Citation

  • Arrigo, Ugo & Di Foggia, Giacomo, 2013. "Assessing the railways subsidy in selected European countries: insights from the Italian case," MPRA Paper 67830, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:67830
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    References listed on IDEAS

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    2. Florent Laroche & Ayana Lamatkhanova, 2020. "Exploring effects of competitive tender for users in the regional railway market: evidence from Europe," Working Papers halshs-02930832, HAL.

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    More about this item

    Keywords

    Railways; State aid; Public finance; Subsidies; Europe; Competition;
    All these keywords.

    JEL classification:

    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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