European railway reforms and efficiency: Review of evidence in the literature

Issue: 2/2017

Hana Fitzová

Faculty of Economics and Administration, Masaryk University, Brno, Czech Republic,

The objective of the European railway reforms which started in the 1990s was to enable the entry of competition to raise the efficiency of railway transport. This was undertaken because the level of services, particularly in former Eastern Bloc countries, was very low due to neglected investment, and so railway transport market share was in decline. The primary goal of this text is to determine based on available empirical studies whether the reforms affected the efficiency of the railway sector positively, and the secondary aim is to identify the factors which complicate evaluation of the re-forms’ impact. According to empirical studies, the effect of competition on efficiency is unclear. The reforms have brought the most benefit to consumers, but their overall effect depends on many other factors. Competition for the market appeared to be a better way of implementing competition than competition in the market. In addition, comprehension of the problems complicating the analysis and their inclusion in the evaluation process constitutes an important point in evaluating the reforms’ effects and could be inspiring for countries that have not yet implemented all reforms.

DOI: 10.1515/revecp-2017-0005
JEL: R40, C44, C61
Keywords: competition, efficiency, European railway reforms, railway transport

Asmild, M., Holvad, T., Hougaard, J. L., Kronborg, D. (2009). Railway reforms: Do they influence operating efficiency? Transportation, 36(5), 617–638. DOI: 10.1007/s11116-009-9216-x

Bougna, E., Crozet, Y. (2016). Towards a liberalised European rail transport: Analysing and modelling the impact of competition on productive efficiency. Research in Transportation Economics, 59, 358–367. DOI: 10.1016/j.retrec.2016.07.014

Cantos Sánchez, P. (2001). Vertical relationships for the European railway industry. Transport Policy, 8(2), 77–83. DOI: 10.1016/S0967-070X(00)00039-1

Cantos Sánchez, P., Pastor, J. M., Serrano, L. (2010). Vertical and horizontal separation in the European railway sector and its effects on productivity. Journal of Transport Economics and Policy, 44(2), 139–160.

Canots Sánchez, P., Pastor J. M., Serrano, L. (2012). Evaluating European railway deregulation using different approaches. Transport Policy, 11(24), 67–72. DOI: 10.1016/j.tranpol.2012.07.008

Cascetta, E., Coppola, P. (2013). Competition on fast track: An analysis of the first competitive market for HSR services. Procedia – Social and Behavioral Sciences, 111, 176–185. DOI: 10.1016/j.sbspro.2014.01.050

CER. (2011). Public service rail transport in the European Union: An overview.

Coelli, T. J., Rao, D. S. P., O’Donell, C. J., Batesse, G. E. (2005). An Introduction to Efficiency and Productivity Analysis. 2nd Ed. New York: Springer.

Cooper W. W., Seiford, L. M., Zhu J. (2007). Data Envelopment Analysis: A Comprehensive Text with Models, Applications, References and DEA-Solver Software. New York: Springer.

Cooper, W. W., Seiford, L. M., Zhu, J. (eds.) (2011). Handbook on Data Envelopment Analysis. New York: Springer.

Deville, X., Verduyn, F. (2012). Implementation of EU legislation on rail liberalization in Belgium, France, Germany and The Netherlands. Brussels: National Bank of Belgium. (Working Paper No. 221)

Driessen, G., Lijesen, M. G., Mulder, M. (2006). The impact of competition on productive efficiency in European railways. The Hague: CPB Netherlands Bureau for Economic Policy Analysis. (CPB Discussion Paper 71)

European Commission. (2001). European transport policy for 2010: time to decide. Luxembourg: Office for Official Publications of the European Communities. White Paper.

European Commission. (2013a). Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1370/2007 concerning the opening of the market for domestic passenger transport services by rail. Brussels: European Commission. PC0028&from=EN

European Commission. (2013b). European Railways at a junction: The Commission adopts proposals for a Fourth Railway Package. Brussels: European Commission.

European Commission. (2016a). Statistical Pocketbook 2016: EU transport in Figures. Brussels: European Commission. DOI: 10.2832/809634

European Commission. (2016b). Fifth report on monitoring developments of the rail market. Brussels: European Commission.

Friebel, G., Ivaldi, M., Vibes, C. (2010). Railway (de)regulation: A European efficiency comparison. Economica, 77(305) 77–91. DOI: 10.1111/j.1468-0335.2008.00739.x

Griffiths, T. (2009). On rail competition: The impact of open access entry on the Great Britain rail market. In: Beck, A., Veeneman, W., van den Velde, D. (eds.). Beyond Competitive Tendering – Proceedings of the Eleventh International Conference on Competition and Ownership in Land Passenger Transport. Delft: Next Generation Infrastructures Foundation.

Growitsch, C., Wetzel, H. (2009). Testing for economies of scope in European railways: An efficiency analysis. Journal of Transport Economics and Policy, 43(1) 1–24.

Hunold, M., Wolf, C. (2013). Competitive procurement design: Evidence from regional passenger railway services in Germany. Mannheim: ZEW Centre for European Economic Research. (ZEW Discussion Paper No. 13-009)

Ivaldi, M. (2005). Restructuring railways: In theory and practice. CESifo DICE Report, 3(4), 3–9.

IRG-Rail. (2016). Fourth Annual Market Monitoring Report. Paris: Independent Regulators’ Group – Rail.

Jablonský, J., Dlouhý, M. (2004). Modely hodnocení efektivnosti produkčních jednotek. Prague: Professional Publishing.

Johnson, D., Nash, C. (2012). Competition and the provision of rail passenger services: A simulation exercise. Journal of Rail Transport Planning & Management, 2(1), 14–22. DOI: 10.1016/j.jrtpm.2012.09.001.

Komárek, O. (2014). Open Access Konkurence na Trati Wien – Salzburg (Master’s thesis). Brno: Masaryk University.

Ksoll M. (2004). Integration of infrastructure and transport: An assessment from industrial economics and railway perspectives. Paper from 2nd Conference on Railroad Industry Structure, Competition and Investment, Evanston, IL, USA, October 2004.

Lang, M., Lamperrouza, M., Finger, M. (2011). Competition effects in a liberalized railway market. Journal of Industry, Competition and Trade, 13(3), 375–398. DOI: 10.1007/s10842-011-0117-2

Link, H. (2004). Rail infrastructure charging and on-track competition in Germany. International Journal of Transport Management, 2(1),17–27. DOI: 10.1016/j.ijtm.2004.05.002

Mizutani, F., Uranishi, S. (2013). Does vertical separation reduce cost? An empirical analysis of the rail industry in European and East Asian OECD Countries. Journal of Regulatory Economics, 43(1), 31–59. DOI: 10.1007/s11149-012-9193-4

Nash, C. (2008). Passenger railway reform in the last 20 years – European experience reconsidered. Research in Transportation Economics, 22(1), 61–70. DOI: 10.1016/j.retrec.2008.05.020

Nash, C. (2013). Rail transport. In: Finger, M.; Holvad, T. (eds.). Regulating Transport in Europe. Cheltenham: Edward Elgar Publishing.

Nigrin, T. (2014). Open competition or discrimination on tracks? Examples of anti-competitive behaviour of the Deutsche Bahn. Review of Economic Perspectives, 14(1), 16–33. DOI: 10.2478/revecp-2014-0002

Pittman, R. (2005). Structural separation to create competition? The case of freight railways. Review of Network Economics, 4(3), 181–196.

Preston, J., Whelan, G., Wardman, M. (1999). An analysis of the potential for on-track competition in the British passenger rail industry. Journal of Transport Economics and Policy, 33(1), 77–94.

Thompson, L. S. (1997). The Benefits of Separating Rail Infrastructure from Operations. Washington, DC: World Bank. (Viewpoint: Public Policy for the Private Sector; Note No. 135)

Tomeš, Z, Jandová, M. (2015). Přístupy k liberalizaci osobní železniční dopravy v ČR. Acta Oeconomica Pragensia, 24(1). DOI: 10.18267/j.aop.499

Tomeš, Z., Kvizda, M., Jandová, M., Rederer, V. (2016). Open access passenger rail competition in the Czech Republic. Transport Policy, 47, 203-211.

Shires, J. D., Preston, J., M., Nash, C. A., Wardman, M. (1994). Rail Privatisation: The Economic Theory. Leeds: Institute of Transport Studies, University of Leeds. (ITS Working Paper 419)

Vickers, J. (1995). Concepts of competition. Oxford Economic Papers, 47(1), 1–23.

Vigren, A. (2016). Competition in Swedish passenger railway: entry in an open-access market (No. 2016: 18). CTS-Centre for Transport Studies Stockholm (KTH and VTI).

Wetzel, H. (2008). European Railway Deregulation: The Influence of Regulatory and Environmental Conditions on Efficiency. Lüneburg: Leuphana University of Lüneburg. (Working Paper Series in Economics No. 86)

World Bank. (2011). Railway Reform: Toolkit for Improving Rail Sector Performance. International Bank for Reconstruction and Development. Washington, DC: World Bank.