Structural Separation and Access Pricing in the Railways Sector: Sauce for the Goose Only?
17 Pages Posted: 18 Oct 2004
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: Suggested Citation
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