Creating Competition in the Railway Industry
Diploma Thesis from the year 2005 in the subject Economy - Theory of Competition, Competition Policy, grade: 2,0, Friedrich-Alexander University Erlangen-Nuremberg (Wirtschafts- und Sozialwissenschaftliche Fakultät), 107 entries in the bibliography, language: English, abstract: In short, the German railroad markets is introduced, emphasizing on the nature of railway networks and transportation markets in general, The paper proceeds with an explanation of the theory of monopolistic bottlenecks, which can be used as a basis for distinguishing between parts of a railroad network where competition functions efficiently and those that enjoy stable, network-specific market power. Section three is devoted to regulation in connection with access to the transport infrastructure, including the relationship between disaggregated regulation of the railroad network facility and the development of an appropriate approach towards regulation of this monopolistic bottleneck. Furthermore the initiative to privatize railroad network facilities is analyzed in the following chapter. General benefits and drawbacks of privatization of state assets are placed into the more specific setting of the railroad industry. The topical question to what extent railroad infrastructure specific regulation is still necessary, shifts the focus to the vertical problems of the required access of network services to infrastructure management and the idea of vertical disintegration in the railroad industry. The models of vertical integration, disintegration and partial integration are explored in more details. Chapter six explores the opportunities for potential and active competition on the markets for railway passenger transport services, including the effect of intermodal competition between different passenger transport markets. The paper then proposes a model of horizontal disintegration and yardstick competition in the setting of railroad undertakings to assess the application and effectiveness of this competition model in the German railroad market. As a final point, the paper concludes with a summary and recommendations for the further analysis of railroad network markets.
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activities British Rail carriers competitor component cost function demand downstream economies of scope efficiency entrant firm's fixed costs franchise freight German railroad market GÖNENC heterogeneity horizontal disintegration increase incumbent's profit incumbent’s input intermodal intramodal competition investment irreversible costs Japanese railway JR Hokkaido long-distance passenger market power market share model of horizontal model of vertical Mohring Effect monopolistic bottleneck natural monopoly network effects network externalities network industries output overall ownership passenger transportation perfect competition potential price competition price-cap regulation privatization problem Rail Transport railroad companies railroad industry railroad network Railroad Transportation Railroad Railtrack railway industry railway infrastructure railway network railway system railway transportation rate-of-return regulation regional regulated firm regulatory restructuring result SEABRIGHT 2003 sector segment structure subadditivity sunk costs supplier track traffic train transaction costs transport services Transportation Railroad Transportation travel time differential utility vertical disintegration vertical foreclosure vertical integration vertical separation yardstick competition