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European Railway Infrastructure: Towards a Convergence of Infrastructure Charging?
Abstract
Thirteen years ago, the European Directive 91/440 was implemented with the aim of increasing the efficiency of railway organisations throughout Europe. The main requirement of the Directive was to split transport operating from infrastructure management (at least in accounting terms). It also started the process of opening access for new operators; this is steadily being extended. Consequently, the issue of infrastructure charges is becoming more and more important. The paper underlines the fact that despite national differences, there are some signs of ways of convergence of infrastructure charges, due to the fact that the same key issue remains about infrastructure management: how to finance the renewal and development of infrastructure? So, among a wide range of objectives, some of them are becoming more and more crucial leading the principles of infrastructure charging to converge.
... There is a broad literature that has explored various capacity pricing and allocation mechanisms for railways (Affuso, 2003;Crozet, 2004;Gibson, 2003;Nash, 2005;Perennes, 2014). In general, different countries have promoted different mechanisms for capacity pricing and allocation, with differing objectives. ...
... Price-based mechanisms are typically complemented with priority rules that allow the IM to decide which train to schedule when there are conflicts (multiple TOs willing to pay the predetermined access charges). An example of a price-based mechanism would be a costallocation mechanism that assigns infrastructure-related cost proportionally to the volume of infrastructure use (Crozet, 2004;Nash, 2005;Lopez-Pita, 2014;Texeira and Prodan, 2014). The access charge could also be adjusted considering the TOs' demand for scheduling trains (e.g. ...
... We then use this information to analyze and compare the performance of a case based on the NEC under two alternative capacity pricing and allocation mechanisms: a price-based cost-allocation and priority-rule mechanism proposed by Amtrak (Crozet, 2004;Gardner, 2013;Nash, 2005;NEC Commission, 2014;Lopez-Pita, 2014;Texeira and Prodan, 2014) and an auction mechanism widely proposed in the railway economic literature (Affuso, 2003;McDaniel, 2003;Newbury, 2003;Perennes, 2014). To understand the implications for various stakeholders, we measure performance from the perspective of the IM (cost recovery), the TOs (access charges, trains scheduled), and the end users (number of services, fares). ...
In the last 15 years, the use of rail infrastructure by different train operating companies (shared railway system) has been proposed as a way to improve infrastructure utilization and to increase efficiency in the railway industry. Shared use requires coordination between the infrastructure manager and multiple train operators. Such coordination requires capacity planning mechanisms that determine which trains can access the infrastructure at each time, capacity allocation, and the access charges they have to pay, capacity pricing. The objective of this thesis is to contribute to the field of shared railway systems coordination by 1) developing a framework to analyze the performance of shared railway systems under alternative capacity pricing and allocation mechanisms, and 2) using this framework to understand the implications of representative capacity pricing and allocation mechanisms in representative shared railway systems. There are strong interactions between capacity planning and infrastructure operations in the railway industry; the operations on the infrastructure determine the available capacity in the system. As a consequence, the framework developed in this thesis to evaluate the performance of shared railway systems under alternative capacity pricing and allocation consists of two models: 1) a train operator model and 2) an infrastructure manager model. The train operator model is a financial model that anticipates how train operators would respond to the capacity pricing and allocation mechanisms and determine their demand for infrastructure use. The infrastructure manager model is a network optimization model that determines the optimal train timetable (infrastructure manager's decisions) that accommodates the train operators' demands for scheduling trains, considering the topology of the system, safety constraints, and other technical aspects of the infrastructure for shared railway systems. To be able to solve the train timetabling optimization problem in meaningful instances, this thesis develops a novel approximate dynamic programming algorithm based on linear programming that extends previous algorithms proposed in the literature to effectively solve large network optimization problems. This thesis then uses the train operator model to compare the operational decisions of train operators in shared railway systems with the operational decisions of even-handed integrated railway companies. We show that train operators in shared railway system access charges reflect variable infrastructure manager's costs to operate trains on the infrastructure. We also identify two cases in which the train operators may have incentives to deviate from the integrated railway systems' operational decisions: 1) when the infrastructure manager needs to recover part of the infrastructure management fixed costs, or 2) when the railway system is congested. This motivates the choice of the two case studies of this thesis, one based on the Central Corridor in Tanzania, and the other one based on the Northeast Corridor in the US. We then show how to use the framework proposed in this thesis to analyze the trade-offs associated with the use of alternative mechanisms in these two cases. To our knowledge, this is the first effort to compare alternative mechanisms to price and allocate capacity in the same shared railway system. The results of this thesis show that there are important trade-offs associated with each mechanism and none of them is superior to the other on all dimensions. We thus recommend that system stakeholders carefully analyze the implications of alternative capacity pricing and allocation mechanisms before locking the system into one of them. This is particularly important today since several countries are currently restructuring their railway sector to allow shared use. We claim that the improved understanding of the system performance gained with the framework proposed in this thesis is important to be able to design adequate capacity pricing and allocation mechanisms that can mitigate the coordination problems of shared railway systems while maintaining the benefits of shared infrastructure in the railway industry.
... As to track access charges, Crozet (2004) reviewed the charging systems in several European countries a few years after the 2001 directive (EC 2001). The author attempted to find some best practices for infrastructure charging easily transferable between countries. ...
... Although these track access charges vary between the reviewed countries, this survey indicates that many include similar components and converge to a similar charging system, just as predicted by Crozet (2004). This is illustrated in Table 9 showing the various cost components that are included in the track access charges in the different selected countries based on their respective 2020 network statement documents. ...
Railway markets in Europe have been reorganized to allow competition between different operators. Thus, European railways have been vertically separated, separating infrastructure management from provisions of train services. This allows several train operators to compete for passengers and freight services. Different ways have emerged for vertical separation, capacity allocation and track access charges. This paper reviews, compares and discusses important deregulation aspects, using examples from a number of European countries to show different possible solutions. The study describes how competition has been introduced and regulated, with a particular focus on describing the different ways capacity is allocated and how conflicting requests by different train operators are resolved. It also reviews the related issue of how access charges are constructed and applied. Although guided by the same European legislation, we conclude that the studied railways have different deregulation outcomes, e.g., market organization, capacity allocation. Besides, few countries have so far managed to create efficient and transparent processes for allocating capacity between competing train operators. Although allowed by the legislation, market-based allocation is absent or never used. In order to foster more competition which can yield substantial social benefits, the survey indicates that most European railways still need to develop and experiment with more efficient and transparent capacity allocation procedures.
... It is generally agreed that the marginal cost pricing policy may result in the most efficient use of the transport infrastructure system (Khisty and Lall, 1990). Crozet (2004) asserted that the short run marginal cost constitutes the best theoretical solution to the issue of infrastructure charging. EMCT (2005) states the economic principles behind an appropriate infrastructure access regime are well established. ...
... The choice of each particular method for access pricing is to depend on particular objectives that the regulator must clearly balance and weight accordingly within the economic environment in which its action takes place. Link, 2004;Crozet, 2004;Terada, 2001). ...
In Presidential Decree Republic of Indonesia Numb. 53 in 2012, it is explained that every railway operator which use railwaysinfrastructure have to pay Track Access Charges (TAC) to Government. The rules of the calculation of TAC which have to be paidby PT.KAI is explained in Regulation of Transport Minister Numb. 62 in 2013. In this regulation, there is priority factor whichhas same value for every service type of the train (Fp=1). Actually, every service type of railway has different priority and givesdifferent damages for infrastructure based on the speed. This research intended for analyzing the influence of priority factor toTAC. Quantitative description method is used in this research. The objects of the research are Executive, Business, and Economicclass of passenger train in Java. It suggested with two alternatives calculation of TAC with variations in priority factor (Fp) whichoriented on train travel time. Then, the best Fp is chosen which represented the real condition where the train with higher priorityhas to pay higher TAC than that of others. The result of this research, with Fp=1, showed the value of TAC for Economic class isIDR 68.00/GT/km, for Executive class is IDR 30.00/GT/km, while for Business class is IDR 28.00/GT/km. A modified of Fp,with two alternatives calculation, considering travel time and stay time of each railway service type showed a better result. Thefirst alternative generates Fp= 1.39 for Executive class and gives IDR 42.00/GT/km for the average TAC, while Fp=1.21 forBusiness class and generates IDR 34.00/GT/km for average TAC. The second alternative generates Fp=3.00 for Executive classand it gives IDR 91.00/GT/km while for Business class generates Fp=2.00 and it gives IDR 56.00/GT/km. The calculation of TACwith second alternative is more represents the real condition, where Executive class has higher priority and speed than the otherclasses, so it also has to pay higher TAC.
... Many efforts to internalize (that is to ask each transport mode to pay the external costs it causes) external costs have failed to establish the appropriate legislation instruments. In order to properly internalize the external costs, the following action strategies are appropriate (Crozet, 2004;Macharis et al., 2010): application of road pricing schemes for passenger cars (i.e. by mean of tolls), especially in urban areas, in order to confront capacity problems. A differentiation of charges could be applied, depending upon the net weight and the power of cars as well as the emission of pollutants, introduction of road pricing schemes for freight vehicles. ...
... An eventual internalization of external costs and harmonization of infrastructure user charges to the market prices of various transport modes would have the following effects (Verhoef, 1994;Crozet, 2004;Macharis et al., 2010;van Dender, 2013): the internalization of average external cost would change tariffs of rail and road transport. In passenger transport the effect would vary between 20÷30% in favor of railways whereas in freight transport the effect would be even more significant (40%), the charging of infrastructure for rail, road and airport on equal basis and eventual internalization of external costs may change current terms of competition. ...
A literature review of the environmental effects and externalities of the transport sector and the concerns in sustainable transport planning is presented in this paper. The relation between air pollution and transport, considering that transport is an important air pollution emitter, is initially analyzed. The causal relationship between per capita GDP and individual consumption for transport, annual growth of global GDP and CO2 emissions and changes in CO2 emissions from fuel combustion by the various transport modes is then explained. Furthermore, energy consumption of transport modes for the EU countries is illustrated, as well as the relation between traffic flow and noise emissions and the implications of transport infrastructure to the landscape and environmental aesthetics. The increase in passenger mobility has caused traffic congestion, constituting an effect which is also quantified. Furthermore, the impact of accidents in terms of injuries, impairments and fatalities is a global social and public health issue. Moreover, the transport policies and the impact on economic and urban development, health, environmental protection and energy, focusing also on possible conflicts and convergence between safety and environmental policies are discussed. Finally, transport sector externalities, quantification in monetary units and possible effects of eventual internalization of these external costs are presented.
... In addition, access to the rail infrastructure is a crucial component of the European railway liberalization process (Gibson et al. 2002;Crozet 2004;ECMT 2005;Nash 2005). For instance, the European Union legislation requires Member States to separate the rail infrastructure from operations and to calculate access charges for the use of the rail infrastructure on a transparent and non-discriminatory basis. 2 The First Railway Package required Member States to separate the management of infrastructure, freight and passenger services into separate divisions with their own profit and loss accounts and balance sheets. ...
... 14 Furthermore, note that there exists a threshold number n v k of competitors above which access charges a * k are below marginal infrastructure costs v: that is, a * k < v ⇔ n k > n v k . 15 Having access charges below marginal cost poses a significant budgetary (and political problem) because one of the major drawbacks of marginal cost pricing (short-run or longrun) stems from the fact that railways are experiencing economies of scope, densities of scale and hence that marginal cost pricing does not fully cover costs (Crozet 2004). ...
This paper presents a game-theoretic model of a liberalized railway market, in which train operation and ownership of infrastructure are vertically separated. We analyze how the regulatory agency will optimally set the charges that operators have to pay to the infrastructure manager for access to the tracks and how these charges change with increased competition in the railway market. Our analysis shows that an increased number of competitors in the freight and/or passenger segment reduces prices per kilometer and increases total output in train kilometers. The regulatory agency reacts to more competition with a reduction in access charges in the corresponding segment. Consumers benefit through lower prices, while individual profits of each operator decrease through a higher number of competitors. We further show that the welfare effect of increased competition in the freight and/or passenger segment is ambiguous and depends on the level of competition. Finally, social welfare is higher under two-part tariffs than under one-part tariffs if raising public funds is costly to society.
... The lack of synchronized progress with other sciences has resulted in the neglect of analysis and design for these structures. Considering the priorities of the country's rail transport vision, the development of customer-oriented transportation through scheduled cargo trains, combined transportation, and high-speed passenger trains stands out as a crucial focus (Button et al., 2004;Crozet, 2004;Donato et al., 2004). Achieving this vision necessitates the establishment of a solid foundation for high-performance structured pavements. ...
Today, many countries are opting for ballast less paving of railways using concrete line slabs as an alternative. Ballast paving is particularly prevalent in high-speed lines, urban railways, as well as bridges and tunnels designed for high loads and speeds. The priority lies in ensuring that these lines are paved with proper structural performance, especially considering the mechanics of the line and the choice between ballast pavement and line slabs. This article delves into the structural modeling and analysis process of ballast and slabs for railway lines. Models for both ballast and slab lines under passage have been developed. The study investigates the train wheel load and the impact of bed conditions. Theoretical solutions, including the beam model on an elastic bed for ballast lines and the two-beam model for line slabs, have been presented. Multiple finite element models were explored using ABAQUS software, confirming the accuracy of the theoretical results with acceptable precision. This work establishes a suitable model for calculating the effects of vertical force on the line pavement structure and provides applications for comparing design performance between ballast and slab lines. The results highlight the optimal performance of the modeling and the superiority of the line slabs.
... Even though the observed period is long, we can conclude that the charge models have changed significantly, during this time, within the European railways. For example, Germany has changed the charge model five times [11,12] but only changed the type of charges in 2020, France changed its model twice, but the charge type has always been additive [13][14][15]. When it comes to small railways, Croatia changed its elements and ponders five times with [16] and Montenegro for four times [17], but the types of charges stayed the same in both countries. ...
It has been exactly 20 years since the common grounds for the design of track access charges (TAC) were laid for the European railways by the publication of Directive 2001/14/EC. However, these grounds were defined broadly, thus resulting in significant divergence both in the models applied by countries and during the model redesign within one country over the course of time. The participants in the process of charge system redesign includes all stakeholders from a country’s railway sector (infrastructure manager, train operating companies, the ministries responsible for transport, finance and economy, government, and regulatory bodies). Their opinions and requirements are often opposed, and they all need to be acknowledged simultaneously. This paper aims to solve the issue of ensuring continuity in the charge model redesign while achieving a balance between the requirements of all stakeholders. Moreover, it tackles the issue of producing a sustainable long-term TAC model by using survey methods and statistical analysis. The proposed approach was tested in practice during the access charge model redesign for the railways of Montenegro. The results show the importance of continual enhancement in TAC model development as one of the challenges and key precursors for the harmonization of all stakeholders’ requirements.
... The implementation of neutral access conditions and transparent charging systems remains a problem in many countries of Europe. Some of the convergence opportunities expected by Crozet in station charging did not occur (Crozet 2004). Tomeš and Jandovà (2018) have evaluated the international lines between Austria, Czech Republic, and Slovakia. ...
... The implementation of neutral access conditions and transparent charging systems remains a problem in many countries of Europe. Some of the convergence opportunities expected by Crozet in station charging did not occur (Crozet 2004). Tomeš and Jandovà (2018) have evaluated the international lines between Austria, Czech Republic, and Slovakia. ...
... The implementation of neutral access conditions and transparent charging systems remains a problem in many countries of Europe. Some of the convergence opportunities expected by Crozet in station charging did not occur (Crozet 2004). Tomeš and Jandovà (2018) have evaluated the international lines between Austria, Czech Republic, and Slovakia. ...
This chapter presents an overview of terminal railway regulation principles and implementation. It starts with the different elements of terminal infrastructure, how these elements were considered as essential facilities in various periods of railway development worldwide and what type of regulation patterns were implemented. The aim of the paper is to articulate terminal regulation principles and the transformative relationships between state, rail infrastructures, transport companies, and other stakeholders. It details regulation conditions for terminals in Europe, with access conditions and pricing schemes for the 27 countries. The conclusions are that, along with slow and heterogeneous pathways to free and indiscriminate access to terminals in Europe, some terminal management entities follow an entrepreneurial pattern and strategically redefine their mission, taking the opportunity of their progressive autonomy from railway incumbents to develop side businesses such as retail activities and real estate in regulated or in nonregulated railway models.
... principles for calculating access charges. Crozet (2004) reviewed the charging systems in several European countries, highlighting that there are signs of similar issues even with national differences. Link (2004) focused on the German regional rail passenger transport to analyse track access conditions and access charges, and found that even with an increasing competition, the incumbent is still dominant. ...
In the last few decades, many railway markets (especially in Europe) have been restructured to allow competition between different operators. This survey studies how competition has been introduced and regulated in a number of different countries around the world. In particular, we focus on a central part of market regulation specific to railway markets, namely the capacity allocation process. Conflicting capacity requests from different train operators need to be regulated and resolved, and the efficiency and transparency of this process is crucial. Related to this issue is how access charges are constructed and applied. Several European countries have vertically separated their railway markets, separating infrastructure management from train services provisions, thus allowing several train operators to compete with different passengers and freight services. However, few countries have so far managed to create efficient and transparent processes for allocating capacity between competing train operators, and incumbent operators still have larger market-share in many markets. Abstract In the last few decades, many railway markets (especially in Europe) have been restructured to allow competition between different operators. This survey studies how competition has been introduced and regulated in a number of different countries around the world. In particular, we focus on a central part of market regulation specific to railway markets, namely the capacity allocation process. Conflicting capacity requests from different train operators need to be regulated and resolved, and the efficiency and transparency of this process is crucial. Related to this issue is how access charges are constructed and applied. Several European countries have vertically separated their railway markets, separating infrastructure management from train services provisions, thus allowing several train operators to compete with different passengers and freight services. However, few countries have so far managed to create efficient and transparent processes for allocating capacity between competing train operators, and incumbent operators still have larger market-share in many markets.
... The implementation of neutral access conditions and transparent charging systems remains a problem in many countries of Europe. Some of the convergence opportunities expected by Crozet in station charging didn't occur (Crozet 2004). Tomeš and Jandovà (2018) have evaluated the international lines between Austria, Czech Republic and Slovakia. ...
This articles presents an overview of terminal railway regulation principles and implementation. It starts with the different elements of terminal infrastructure, how these elements were considered as essential facilities in various periods of railway development worldwide and what type of regulation patterns were implemented. The aim of the paper is to articulate terminal regulation principles and the transformative relationships between State, rail infrastructures, transport companies and other stakeholders. It details regulation conditions for terminals in Europe, with access conditions and pricing schemes for the 27 countries. The conclusions are that, along with slow and heterogeneous pathways to free and undiscriminated access to terminals in Europe, some terminal management entities follow an entrepreneurial pattern and strategically redefine their mission, taking the opportunity of their progressive autonomy from railway incumbents to develop side businesses such as retail activities and real estate in regulated or in non-regulated railway models.
... The author delivered other papers such as Nilsson (1999) that explored auctioning (with experimental games) and railway capacity pricing. Crozet (2004) argued for observable convergence of infrastructure charging, despite some regional differences, on the EU railway network since introduction of vertical separation and opening the market. Perennes (2014) challenged the administrative procedures of capacity allocation and proposed a decentralised, 'invisible hand' system. ...
In recent years the rail sector has experienced significant demand growth that leads to increased competition for the scarce resource of railway capacity. In Great Britain, the current policy tends to favour passenger trains to freight operators. This study explores how existing railway capacity allocation process can be improved in order to strengthen the competitiveness of freight train operators. A decision that is faced by the Infrastructure Manager herein is to determine how the scarce resource should be allocated among the different operators such that the overall social welfare can be maximised. In particular, we are interested to look at the implications on social welfare, system efficiency, and (re-)distribution of benefits among operators should more capacity be allocated for freight trains. The research questions were investigated through a set of simulation games based on a real world scenario collected from the Brighton Main Line (BML) in Southeast England. To the best of our knowledge, this is the first attempt to model and analyse impacts of the hypothesised preferential treatment of freight operators under several sets of regulations and bidding frameworks on efficiency, equity, and social welfare. Our findings reveal improvements in social welfare and equity among different operators, but loss of rail system efficiency due to the increased level of heterogeneity seen in the train mix. From the perspective of infrastructure utilisation, on heavily congested mixed traffic lines, investments for freight train services should be prioritised in order to reduce the speed differentials between slower freight and faster passenger trains and increase flexibility of scheduling and reduce capacity loss. It is also found that infrastructure managers’ expertise has an important impact on the quality of the initially proposed timetabling solution. We conclude with a list of suggested improvements to the current Great Britain policy so that the needs of freight operators and hence their customers are better represented.
... Due to the development of computerized decision support systems (Zoeteman 2001;Crozet 2004;Caetano, Teixeira 2013), there has been an increasing focus in research on: ...
In this paper, a real option approach to determine the optimal time to execute interventions on rail infrastructure, when it is not known for certain which intervention is to be executed, is presented (i.e. the optimal intervention window). Such an approach is useful in the management of rail infrastructure that belongs to a multi-national rail corridor where multiple railway organizations, ideally, should coordinate their maintenance interventions, years in advance, to minimize service disruptions. The approach is based on an adaptation of the Black and Scholes differential equation model used to value European call options in financial engineering. It is demonstrated by determining the optimal intervention window for infrastructure in a fictive rail corridor.
... A külpiaci marketing kiindulópontja a nemzetközi marketing környezet elemzése, a célpiac(ok), illetve a belépési stratégia kiválasztása (McDermott, Chan, 1995(Crozet, 2004, Matthews, Nash, 2004, Ricci, Enei, 2008). , Craig, Douglas, 2005, Usunier, Lee, 2005, Kelemenné, 2006d). ...
http://www.omikk.bme.hu/collections/phd/Gazdasag_es_Tarsadalomtudomanyi_Kar/2014/Kelemenne_Erdos_Aniko/ertekezes.pdf
... Charge should be internalized externalities and based on marginal social cost; it should vary through different types of trains, time and space, and it should be proportional to usage. There are numerous studies (e.g., [5], [32], [36]) on how to implement the new pricing method, or rather, on how to amend it in practice. This new pricing system should be introduced gradually, at the same time as all transport modes, except in railway transport, which should be postponed for sustainability reasons. ...
This paper analyses the liberalization procedure of the passenger and freight railway transport market in the Visegrád states. The paper applies macro and micro environment analysis to demonstrate the situation of these post-communist countries and introduces the regulatory impact on the railway market supply while concentrating on intra-modal competition. The aim of the paper is to highlight how railway liberalization has changed the shrinking railway market in order to define a strategic policy intervention, with the express purpose of increasing the competitiveness of railway transport and solving efficiency problems. The paper introduces the rate of railway market attractiveness (RAMATE rate) in order to compare the attractiveness of the different railway markets of the European Union for new entrants and the degree of deregulation.
... It seems, at first sight, that the logic behind adoption of different AC principles has been strictly driven by their different attributes. However, when looking more closely, it occurs that the choice of an AC principle corresponds to different primary goals (strategies) in stemming the chargespromoting the efficiency of IM (Jupa, 2009;Santos et al., 2010), sustainability of the transport system as a whole (Calvo et al., 2007), and promoting the financing of infrastructure (Crozet, 2004). Therefore, the use of different AC principles is due to the existence of different primary strategies. ...
The motive of this research is the fact that until now no universal model of access charges (AC) has been defined. In the process of modelling, AC principle is one of the key elements for defining the access charges. In this paper is proposed a model for AC principle selection based on the Analytic Network Process (ANP) approach. The developed model has allowed presenting the objectives of the identified stakeholders through the established criteria and from three different perspectives: the government influence, the railway market environment, and efficiency of network use. Based on the results of a research, network structure of the ANP method can successfully resolve the dependence and conflicts among evaluation criteria for AC principle selection. The proposed ANP based model can become a tool for evaluation and ranking of the AC principle as presented in the case study of Serbian Railways. The paper is based on real data.
... According to previous works (ECMT, 2005), values for infrastructure charges in different European countries can vary widely from less than 0,5€ per train-km to up to 4€ per train-km, in the case of passenger services. However, values for particular time periods or specific lines (such as high-speed lines) might give rise to much higher charging values, as discussed by Crozet (2004). ...
... According to Affuso and Newbery (2002), up to 82 per cent of each asset of the transport companies in Great Britain are specific. Ferreira (1997), Crozet (2004), Bouf et al. (2005), von Hirschhausen and Siegmann (2004) and Merkert et al. (2008) detected asset specificities of different kinds (physical specificity, site specificity, dedicated specificity and temporal specificity) and different levels of relevance down-stream on the infrastructure level as well as up-stream on the operational level of rolling stock. ...
We analyze the impact of different organizational structures on incentives to invest in railways: vertical integration, vertical separation, and a hybrid form. Economic theory predicts that vertical integration fosters socially optimal investment, whereas, due to potential hold-up problems, both vertical separation and hybrid forms cause severe underinvestment. We test these theoretical predictions in a laboratory experiment and find evidence that, in a vertically integrated environment, the level of investment in rolling stock and in rail infrastructure is roughly socially optimal. The complete absence of a discrepancy in our experimental results between vertical separation and the hybrid organisational structure, contradicting the predictions of model-theory, is surprising and can be attributed to the relatively high investments in the separated model. This contradiction might also be explained by the existence of social preferences.
... The International Journal of Transport Management recently published a special issue, volume 2 (1), on European Rail Policy. Most of the articles concern rail passenger service, but Crozet (2004) compares Great Britain, France and Germany in terms of their infrastructure charges for access to the railroad system by a third-party operator. ...
This paper addresses a hub-and-spoke network problem for railroad freight, where a central planner is to find transport routes, frequency of service, length of trains to be used, and transportation volume. Hub-and-spoke networks, often found in air freight, have not been favoured by railways in the past. Such a structure could be profitable, however, if there exist concentrated freight flows on some service links. We formulate a linear integer programming model whose objective function includes not only the typical operational cost, but also cost due to the transit time spent by freight in the network. We then develop heuristic algorithms to solve large scale instances occurring in rail freight systems in France plus Italy; Germany; and a 10-country European network. By assuming that every node is equipped with consolidation capability, we let the final solution naturally reveal potential hub locations, the impact of several of which is studied by sensitivity analysis.
... Our analysis indicates that European railways have experienced a significant cost increase due to allocative and technical inefficient behaviour, with a sample mean increase in variable costs due to allocative inefficiency of around 7% and due to technical inefficiency of around 6.5%. Crozet (2004) points out that following the first steps of the railway reforms in the 90s, by combining both policy and practice of recent developments in relation to the rail deregulation process, a paradoxical situation appeared. While countries such as Germany were pursuing an economically logical path, i.e. high infrastructures charges and high investment levels, others were following an apparently non-economic logic, i.e. high investment levels combined with low charges (France, Sweden, Switzerland) or on the contrary high charges and low investments levels (UK). ...
This paper provides an empirical analysis of the relative contributions of allocative and technical efficiency to the productivity
performance of European railways over the period 1972 to 1999. A stochastic frontier approach is used to analyse the cost
structure of the railway industry. We estimate a translog cost system in which allocative inefficiency is modelled through
an exact relationship between the cost share equations and the cost function. To allow the estimation of such a model using
the sample theory approach we assume that the share equation residuals represent deviations from first-order conditions and,
therefore, that they represent exclusively allocative inefficiencies. The use of this simplifying assumption renders our analysis
computationally tractable, but it could be inconsistent with the economic theory of duality and for that reason caution is
required in interpretation of results. Acknowledging this caveat, we find that European railways have experienced significant
cost increases due to inefficient behaviour, with a mean value of around 15%. In contrast to previous studies, however, our
estimates indicate a larger role for allocative inefficiency, which accounts for around of a half of the total increase in
cost inefficiency.
... The update and improvement of the current infrastructure charging system should be done in the light of the lessons and experience gained in EU member states in the process of its implementing during last ten years (Crozet, 2004). ...
The proposed article has been developed as a result of a research project funded by Marie Curie Programme and performed under the Economics, Policy and Appraisal Training Site in Institute for Transport Studies, University of Leeds. The article presents an analysis of the current charges for the use of rail infrastructure. The results of this analysis are used to evaluate the pricing principles and approaches to charging infrastructure costs in Bulgaria. The deficiencies of the existing infrastructure charging system are discussed and appropriate measures for their overcoming are outlined. The paper gives an outline for the way ahead and suggests a model for rail infrastructure costs estimation which will be developed on the basis of the opportunities for transferability of scientific methodology for infrastructure charging assessed according to the UNITE research project performed with participation of the ITS.
Sweden has been a front runner in vertical separation. We use data from the business long-distance corridor in Sweden to calibrate and define a demand and supply model. We simulate how the profit, welfare, fares, frequencies, modal shares and train size depend on the level of the track charges. We simulate the welfare optimal track charges, given different levels of congestion on the track, hence using the charges as a pricing instrument to allocate the train slots efficiently. We find that increases in charges have a limited impact on fares but larger impacts on the frequency. When the length of the trains can be extended and when the crowding penalty is high, the impact of higher track charges on the frequencies is larger. Higher track charges increase the length of the trains if possible. The intermodal competition from road and air has a significant impact on rail fares.
The purpose of the study is to expand the understanding of corporate governance mechanisms and company performance in Nigeria. In particular, it focuses on the upper echelon and resource dependence theories, which relate to the foreign CEO. The fixed and random effect estimators are employed to identify the variables that influence the performance of public listed companies on the Nigerian Stock Exchange. The empirical analysis shows that CEO nationality, percentage of non-executive directors, board size and board meetings statistically influence company performance. This indicates that these are the relevant corporate governance variables which benefit shareholders. More importantly, the study indicates CEO’s nationality provides a better alignment of interests of shareholders and managers, which increases a company’s competitive advantage. Thus, the results serve as a guide to regulators to design and implement key corporate governance mechanisms in Nigeria to encourage diversification of boards. In addition, the study is one of the few studies that considers this aspect, especially in the Nigerian context and adds to the extant literature on the vital role of foreign CEOs in company performance in Nigeria.
The study analyzes the environmental effects, externalities and energy consumption in transport sector in Egypt. It focuses on external costs from transport sector and its economic impact on society expressed in monetary terms, and these external costs are mainlycongestion, road accidents and air pollution caused by carbon dioxide emissions. The Human Capital approach is applied to estimate economic costs of road accidents in 2014 in terms of injuries, fatalities, damages in vehicles, suffer and loss and these economic costs are estimated to be 3.75 billion dollars. Moreover, the economic costs of air pollution mainly due to carbon dioxide emissions are estimated to be 2.8 billion dollar in 2014, and these estimated economic costs of both road accidents and air pollution are about 5% of GDP. In addition, environmental and safety transport policies are discussed. Also, internalization of externalities and policies adopted in transport sector in Egypt are illustrated and finally possible sustainable transport policies are recommended.
As rail freight reform develops further, parcels transport by the high speed rail network is expanding in China. We explore the optimal operational method through case studies. Both France and Germany have operated parcels trains on their high speed networks, at a speed of 270 km/h and 160 km/h respectively; following the literature we consider both as high speed freight trains. The business model, transportation organization and performance are compared between Germany, France and China. The findings of our analysis suggest dedicated high speed freight trains are better than mixed trains at exploiting advantages of high speed railways and achieving economies of scale. However, the sensitivity analysis tells us the dedicated high speed freight train in China will require at least 5% mode share on the busiest routes like Beijing-Shanghai and Guangzhou-Shanghai and over 30% on less busy routes like Chengdu-Changsha. From German and French experience, volume guarantees seem crucial for the operation of high speed freight trains. Competitive price is also important to attract enough volume. The construction of a limited high speed rail freight network on key routes will permit exploitation of economies of scale. Also night trains are a better choice for parcels and mail delivery companies.
European railway reform separated infrastructure managers from railway undertakings and established financial relationships between the parties by using Directive 2001/14/EC and its amendments (adopted in most countries by 2004). These relationships were defined as infrastructure charging systems, in which infrastructure managers provided nondiscriminatory access to railway capacity. Numerous studies have discussed the resulting practices, and differences in the philosophy, methodology, structure, and charging levels of the implemented charging systems have been revealed. Most systems kept evolving and many were significantly changed. From 2005 through 2012, the disparity continued to increase, with some systems maintaining low charges and simple structure, whereas others increased charges and complicated the calculation methodology by adding new variables. The state of the practice in 2012 and evolution for 2007 through 2012 is assessed here; the focus is on high-speed and intercity services. Also assessed is the significance of charges for the two main players: railway undertakings and infrastructure managers. Infrastructure charges, which are costs for railway undertakings, make up 10% to 50% of estimated railway undertaking revenues. As for the profitability of infrastructure managers for the evaluated high-speed lines, infrastructure charges cover line maintenance costs and generate net positive revenues. In a comparison of initial investment costs with infrastructure manager net revenue, large differences are noted in charging levels between infrastructure managers and between infrastructure manager net revenues for cross-border lines. As the single European high-speed market matures, a question is how important such differences are for the stakeholders and the European Commission in the establishment of a common railway market.
This article presents a systems approach to access charges in unbundling railways where an infrastructure manager charges services to operators on an open market. The motive for this research is the fact that until now no universal model of access charges has been defined. We define a universal access charges model for an essential service package for a mid- and small-size network based on a systems approach to recovering the costs that are incurred as a result of the operation of a train. System elements are a railway network, trains and costs. Having in mind the system complexity a combination of an analytical and engineering approach has been used for access charges modelling. The model has been developed for a Serbian mid-size railway network and tested on real data. The numerical results of model application indicate that with charges defined in this way it is possible to track cost and cost management by services.
Is it possible to select the best access charges model regardless of the performances of the railway network, its historical development and current state, railway market structure or financial objectives and the pricing policy of railway sector in a country? Who makes the decision and that takes into account the interests of all stakeholders? The paper starts from the premise that it is necessary to define and systematize the criteria regardless of the previous questions, but the selection and evaluation of the same criteria and their variants different for specific railway network i.e. the state. In other words, "every time" has its own criteria and that the present moment Serbia, Bosnia and Herzegovina or any other State requires that the criteria reflect the goals of transport policy and the interests of all stakeholders if it wanted to have the best model that fits the reality and the strategic development of the railway sector. Based on the foregoing, the criteria are defined and made their grouping. It is also defined the stakeholders and discussed their position to make decisions and the interests and preferences of the individual criteria.
This course aims at giving participants an insight into the de- and the re-regulation of the network industries, in particular the telecommunications, energy, water, transport and postal sectors. Participants will be introduced to the economic and regulatory aspects of the different sectors, with a special focus on EU legislation and its impact on Member States. The course will also focus on three particularly relevant theoretical perspectives on the liberalizing network industries, namely the new institutional economics perspective, the economics of infrastructure perspective, and the regulatory economics perspective.
European rail policy has concentrated on the introduction of competition into the rail transport market via separation of infrastructure from operations (at least in an accounting sense), by the progressive opening up of entry to the market for new operators and by rules regarding the allocation of slots and the pricing of infrastructure use, administered by an independent regulator. This is all in marked contrast to the US, where concentration has been on parallel competition between vertically integrated railroads. In the following section we explain the development of EU rail policy. We then consider alternative models of rail reform, both in principle and in practice, concentrating on developments in Europe. We present the results of studies examining the success of the European reforms, before concluding by outlining areas where more research is needed. 2. The development of EU Rail Policy For many decades, railways in most of Europe have been seen as a problem. They have steadily lost market share (figs 1 and 2), falling from 10% to 6% of passenger kilometres and 20% to 8% of freight tonne kilometres over 30 years. They also require high and increasing levels of subsidy; Table 1 shows that less than half of the total costs of rail transport in Europe are borne directly by passenger and freight customers. The initial response of the Commission to this situation was to encourage governments to reorganise railways as autonomous commercial bodies (in a number of countries the railways were still run directly by government departments), with separate and realistic accounts and with social obligations minimised but appropriate recompense paid where such obligations were maintained. Governments were not to interfere with market mechanisms by providing subsidies to railways except under specific conditions. Three regulations were critical in this process. These were:
According to the structure, access charges can be simple and two part and then reflect the different cost categories. When using a simple and when two part access charges, does have advantages in relation to the type of railway network and its complexity, its benefits in relation to the network where the certain categories of traffic are dominant (passenger or freight, long distance or suburban and regional, transit or domestic traffic), to reflect the utilization of capacity and congestion, speed and degree of market opening are questions that are analyzed in this paper through the current theoretical and empirical knowledge.
In the European railway framework, the expenses of rail infrastructure costs are partly covered by the governments and partly by the infrastructure managers through the infrastructure charges that operators pay to them for rendering services in the infrastructure they manage. However, the extent to which infrastructure charges cover infrastructure costs is higher for high-speed lines (HSLs) than for conventional lines. This communication characterizes the infrastructure charging systems for HSLs implemented in Europe and analyses the level of charges applied to these lines with the aim of quantifying and analysing the mark-ups above marginal cost that are being charged to high-speed services running in the European HSLs. The survey covers France, Spain, Germany, Italy and Belgium. Neither The Netherlands nor the UK are covered: the former does not commercially exploit HSLs yet, whereas the latter renders passenger transport services by means of franchised passenger train operators. The results obtained show that, despite the great differences between charging systems for HSLs, important mark-ups above marginal costs are applied by all the systems analysed and that common features between them can be established.
Russian railway reform plan calls for partial vertical integration of infrastructure with the transpor-tation services. Alternatively to the complete separation this way of inducing competition proves to be regulatory intensive. The purpose of this paper is twofold. It assesses the current state of the on-track competition at the early stage of the reform and investigates the impact of newly intro-duced tariff structure on competition. Author argues that the lack of tariff flexibility forces the sys-tem towards complete vertical separation. In this case access to infrastructure is charged in accor-dance with the Ramsey formula and final services are unregulated.
Cette thèse, qui s'inscrit dans le questionnement économique général sur la recherche d'outils de régulation des industries de réseaux, questionne la pertinence du choix français de régionalisation ferroviaire. Ce dernier, depuis la réforme introduite par la loi SRU, associe le maintien du monopole d'exploitation de la SNCF pour le Transport Express Régional (TER) avec la décentralisation aux Régions d'une prérogative jusqu'alors assurée de manière bureaucratique et centralisée. Dans cet environnement institutionnel, original au regard du mouvement européen, les Régions françaises ont-elles réussi à écrire et à gouverner le "système SNCF-TER" ? Pour répondre à cette double interrogation, l'auteur mobilise la théorie néo-institutionnelle, à partir de laquelle il propose une matrice interprétative de l'architecture économique des conventions TER et présente une transposition de la méthode des comptes de surplus (MCS), pour l'étude de la performance économique de ces contrats. Les résultats obtenus, sur l'échantillon des sept régions qui ont expérimenté la régionalisation, ne confirment que partiellement les déductions habituelles obtenues à partir de la théorie standard du monopole et de la capture du réglementateur par la firme régulée. Si la contractualisation SNCF / Régions, très éloignée du modèle « net cost », exprime l'acceptation par le Législateur d'une large couverture des risques industriels, commerciaux, et plus encore sur investissements, par la Collectivité, la régionalisation s'est traduite par une grande diversité contractuelle. Une analyse fine montre le caractère hybride des modes de gouvernance que l'auteur qualifie de « fiduciaro-autoritaires ». La MCS révèle que si l'effet du monopole est bien présent et s'impose aux Régions, il ne profite guère à la SNCF, mais plutôt à RFF. Tendanciellement, les voyageurs sont devenus « gagnants » de la régionalisation ferroviaire.
There is an important basic similarity underlying a number of recent works in apparently widely separated fields of economic theory. Upon examination, it would appear that the authors have been rediscovering, in some of the many guises given it by various specific problems, a single general theorem. This theorem forms the core of what may be called The General Theory of Second Best. Although the main principles of the theory of second best have undoubtedly gained wide acceptance, no general statement of them seems to exist. Furthermore, the principles often seem to be forgotten in the context of specific problems and, when they are rediscovered and stated in the form pertinent to some problem, this seems to evoke expressions of surprise and doubt rather than of immediate agreement and satisfaction at the discovery of yet another application of the already accepted generalizations.
In 1776, the same year as the American Declaration of Independence, Adam Smith published The Wealth of Nations. Smith laid out an argument that is now familiar to all economics students: (1) The principal human motive is self-interest. (2) The invisible hand of competition automatically transforms the self-interest of many into the common good. (3) Therefore, the best government policy for the growth of a nation’s wealth is that policy which governs least.
In the last decade managing railway infrastructure in Europe has changed compared to the century preceding it. Due to the restructuring of railways, which has resulted in separate Infrastructure Management and increasing performance demands from governments and Transport Operating Companies, infrastructure performance has become an important issue. Reliability requirements, budget limits, and operational conditions, such as the time available for maintenance, are becoming increasingly strict. As a response Infrastructure Managers (IMs) have started to develop computer-based tools for a quantitative analysis of the (long-term) impacts of design and maintenance decisions. These tools should enable IMs to systematically optimise and underpin their budget needs, minimise the total costs for a required performance level, and guarantee the infrastructure quality in the long run. Although progress has been made over the last years, these tools are still in an early phase of development, and have not yet been successfully implemented in the design and maintenance management processes. In this paper an approach based on Life Cycle Costing has been developed, which is able to support decision-making on design and maintenance quantitatively, even in absence of sophisticated maintenance planning tools, using expert judgement beside empirical data. Key to the approach is a decision support system (DSS) for analysing the long-term impacts of design and maintenance decisions on reliability, availability and cost of ownership. The DSS combines data from different management areas, such as construction, maintenance, financing and transport operations, in order to make estimates of the life cycle costs. Infrastructure availability and reliability are included in the analysis of life cycle costs, as they have an impact on the costs and revenues of transport operations. The DSS concept and its application during the tender for the Dutch High-Speed Line are presented. Both results and obstacles are discussed. Especially in a design phase a lot of uncertainty is involved in the analysis. The DSS proves to be a valuable tool for testing the robustness of design and maintenance decisions and for focusing the discussion on the important cost-driving factors.
This paper measures the relative importance of quality and quantity effects of corporate taxation on foreign direct investment. Quantity is affected if corporate taxes reduce the equilibrium stock of foreign capital in a given country. Quality effects arise if taxes decrease the extent to which investment contributes to the corporate tax base and the capital intensity of production. Depending on the sign of the quality effects, the detrimental welfare effects of corporate taxation are either mitigated or aggravated. We derive a number of hypotheses how corporate tax changes may affect the quality of investment. Our hypotheses are then tested using data from a large sample of European multinationals. With regard to corporate tax effects on the corporate tax base, we find that quality effects account for up to fourty per cent of the total effect. With regard to corporate tax effects on labour income, our results suggest that quality effects mitigate the negative quantity effect by nearly sixty percent (as corporate taxes strongly increase the labor intensity of production). An important implication is that governments should not exclusively care about the size of inbound FDI flows but also about their specific characteristics, i.e. their quality.
The authors have set out an analytical framework of the acceptability of pricing changes in the transport sector. This framework combines the dimensions of economic efficiency (to manage the demand efficiently), territorial equity (guarantee of accessibility), horizontal equity (user-pays principle), and vertical equity (welfare of most underprivileged). The application of this framework was validated on some urban or suburban road toll case studies. The analysis showed that these dimensions of efficiency and equity generally reinforce themselves in their negative or positive aspects. This analysis also showed that these various dimensions of equity cannot be ignored on pain of failure. Moreover the ways according to which the acceptability of urban road user charging could be improved, if not guaranteed, were identified.
This paper addresses the question of yardstick competition and Demsetz competition for western European railways. To that end it is necessary to compare the performance of various railways. Thus, in the first part of the paper we show that it is, to a certain extent, possible to take into account the various dimensions of performance with a frontier approach. Horizontal separation of formerly state-owned monopolies might lead to yardstick and Demsetz competition. We are addressing in the second part of the paper some of the major issues raised by competitive tendering in a horizontally separated railways network, namely vertical separation, optimal size, duration of the franchises, the sunk costs and the network externalities. Finally, we conclude that it is possible to compare the performance of different railways companies and that horizontal separation enable yardstick competition and Demsetz competition, even if some problems remain to be solved especially for the “core” of the systems.
In 1776, the same year as the American Declaration of Independence, Adam Smith published The Wealth of Nations. Smith laid out an argument that is now familiar to all economics students: (1) The principal human motive is self-interest. (2) The invisible hand of competition automatically transforms the self-interest of many into the common good. (3) Therefore, the best government policy for the growth of a nation’s wealth is that policy which governs least.
The paper addresses the recent unsuccessful attempt by shippers to obtain open access to railroad facilities in the United States. Railroad restructuring experiences of the United Kingdom, Germany and Sweden, along with the status of and conventional practices in the US railroad industry are discussed. The decision of the US railroad regulatory body, the Surface Transportation Board, to reject shipper concerns regarding monopoly power abuse on the part of bottleneck carriers and to deny the request for open rail network access is reviewed. Based on analysis of the foundations of economic regulation, the separation of infrastructure ownership from operations is seen as essential in providing open access and achieving efficiency gains.
The European Commission has suggested that the use of scarce railway track capacity should be charged for on a marginal cost basis and that a welfare enhancing procedure to allocate capacity between competing operators is to be implemented. The present paper presents a practicable way to deal with these challenges. Two issues are at the analytical core of the problem. First, in order to prioritise, accurate information is required about the operators' willingness-to-pay for track access; to this end, an auctioning procedure has been developed. Secondly, an approach to handle the technically complex optimisation problem is needed so that `reasonably' optimal allocations, given the `accurate' information, can be established; dual optimisation is suggested as the remedy. Recent experiences from the US auctioning of radio-wave frequencies are cited as supporting evidence for the rationale of the approach.
This paper addresses the question of open access for railways, comparing the new situation created by the current European reform and the present situation in the US, deriving from the deregulation. Open access in this paper is defined as the possibility to use some slots on rail infrastructure on a non discriminatory basis. Concerning railway, it is interesting to analyze why two market oriented areas (the US and the EU) exhibit so important differences. First, we address the question of open access, which is both desirable and problematic, given the specificity of railways economics. Then, we will consider the question of the link between open access and vertical separation, which lies behind the rationale of European reform. This had to be compared to the vertically integrated railways of the US. The third part will show how various infrastructure charging systems might favour or preclude open access. After a brief review of the theoretical principles, two systems will be analyzed the French one and the German one. We will conclude that different situations and different objectives might lead to different railways systems but this diversity might be problematic for EU.
Rail access pricing: an examination of the UK approach
- S Cole
- T Holvad
Cole, S., Holvad, T., 1999. Rail access pricing: an examination of the UK approach, in: Proceedings of the 8th WCTR, pp. 473–486.
Restructuring regulation of the railroad industry World Bank Working Paper 1506
- N Kessides
- R Willig
Kessides, N., Willig, R., 1995. Restructuring regulation of the railroad industry. World Bank Working Paper 1506, Washington, DC. Link, H., 2003. Rail Infrastructure Charging and on-track competition in Germany––nine years later. In: Paper Presented at the Annual AET Conference, Strasbourg, October 2003, 16p.
La tarification des infrastructures ferroviaires
- M Baritaud
Baritaud, M., 2001. La tarification des infrastructures ferroviaires. Ph.D. Dissertation, Ecole des Mines de Paris. Baumol, W., 1983. Some subtle issues in railroad regulation. Interna-tional Journal of Transport Economics 10 (1–2), 341–356.
Analyse economique des transports Acceptability factors to transport policy changes
- E Quinet
- Paris
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- C Raux
- S Souche
Quinet, E., 1990. Analyse economique des transports, Paris, PUF, 419p. Raux, C., Souche, S., 2000. Acceptability factors to transport policy changes. In: European Transport Conference, Proceedings of Seminar C, Homerton College Cambridge, vol. P438, pp. 167– 178.
Urban transportation economics Open access, vertical separation and infrastructure charging systems: railroad and railways
- K Small
Small, K., 1992. Urban transportation economics. Harwood Academic Publishers, New York. 181p. Further reading Bouf, D., 2002. Open access, vertical separation and infrastructure charging systems: railroad and railways. Global Business and Economics Review, Anthology, 310–321.
Rail infrastructure charging in Europe--principles and practice
- C Nash
- B Matthews
- G Whelan
Analyse économique des transports
- E Quinet