THE CASE FOR RAIL REFORM IN EUROPE: EVIDENCE FROM STUDIES OF PRODUCTION CHARACTERISTICS OF THE RAIL INDUSTRY

In Europe, there is pressure for radical reform of the structure of railways. This paper attempts to determine, from empirical analysis of production characteristics, whether railways are natural monopolies or if they should be reformed in any way. The theoretical requirements for a natural monopoly in a multiproduct industry are explored initially, followed by a range of empirical studies examined for evidence. It was found that railways are characterized by economies of density, but that economies of scale are typically exhausted at a modest size relative to that of many existing companies. This might suggest breaking larger companies apart into smaller ones. However, little evidence exists on economies of scope between passenger and freight services, or on whether the observed economies of density apply solely to the infrastructure or to both infrastructure and operations. Thus, existing empirical evidence provides little light on the current policy of separating infrastructure from operations and opening up access to new operators. The growing practice of franchising might be a way of reconciling the need for competitive pressures with the continuing exploitation of economies of density.

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  • Corporate Authors:

    Instituti Editoriali e Poligrafici Internazionali

    Via Giosue Carducci 60, Ghezzano
    La Fontina,   Italy  56010
  • Authors:
    • Savignat, M G
    • NASH, C
  • Publication Date: 1999-6

Language

  • English

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Filing Info

  • Accession Number: 00781898
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Dec 30 2000 12:00AM