Structural Separation and Access Pricing in the Railways Sector: Sauce for the Goose Only?

17 Pages Posted: 18 Oct 2004

See all articles by Russell W. Pittman

Russell W. Pittman

U.S. Department of Justice - Economic Analysis Group; Kyiv School of Economics; New Economic School (NES)

Date Written: October 15, 2004

Abstract

The freight railways sector has three attributes that have proved problematic for recent experiments with vertical separation: a) a relatively high share of network costs in total delivered service costs, b) an apparent persistence of economies of scale at the "competitive" train operations level, and, perhaps most important, c) strong economies of vertical integration that are focused on the interface point of wheel and rail - i.e., exactly where vertical separation takes place. The third factor in particular seems a clear illustration of the rationales discussed by Coase and Williamson for the broad vertical scope of a single firm and the disadvantages of relying on market transactions under certain conditions.

Keywords: Railways, competition, regulation, restructuring, vertical separation, vertical integration, transactions costs, Coase, Williamson

JEL Classification: D23, L14, L22, L51, L92, L97

Suggested Citation

Pittman, Russell, Structural Separation and Access Pricing in the Railways Sector: Sauce for the Goose Only? (October 15, 2004). Available at SSRN: https://ssrn.com/abstract=605621 or http://dx.doi.org/10.2139/ssrn.605621

Russell Pittman (Contact Author)

U.S. Department of Justice - Economic Analysis Group ( email )

450 5th St. NW
Antitrust Division
Washington, DC 20530
United States
202-307-6367 (Phone)
202-307-3372 (Fax)

Kyiv School of Economics ( email )

vul. Yakira, 13, 3d floor, suite 334
Kyiv, 04119
Ukraine

New Economic School (NES) ( email )

100A Novaya Street
Moscow, Skolkovo 143026
Russia

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