Going Places: Rail Transport in Japan

Fumitoshi Mizutani

No 2019-03, Discussion Papers from Kobe University, Graduate School of Business Administration

Abstract: The purpose of this short paper is to summarize the state of rail transportation in Japan and to recount recent developments. Points of focus here are organization and types of competition in the rail industry in Japan, the evolution of passenger and freight rail transportation, yardstick regulation as a competition tool, and recent vertical separation in Japan. Several distinguishing factors of the Japanese rail industry are discussed. First, passenger rail transportation is still vital in Japan, but the freight rail business is weaker than in other major industrial countries. The second notable feature of the rail industry in Japan is the extraordinary number of rail operators, the vast majority of which are privately owned passenger railways. Third, most railways are vertically integrated, and entry into and exit from the market are not free but are regulated. Fourth, there are eight types of competition, among which is yardstick competition, an indirect form that is applied to separate markets and has existed in Japan since the 1970s. Fifth, as for the evolution of passenger and freight rail transportation, two developments—the Ekinaka business for passenger rail and the Eco-Rail-Mark certificate system for freight—are underway in the rail industry. Sixth, yardstick regulation is effective to some degree, but it is unknown how long the effect will continue. Last, while vertical integration is the norm in Japan, there are cases of vertical separation in some urban area operations. Recently, however, new types of vertical separation have been emerging, mostly for financial reasons. As competition in Japan’s rail industry has been very limited up to now, Japanese policy makers would be wise to seek lessons from the European experience.

Keywords: Rail industry in Japan; vertical integration; yardstick regulation; Ekinaka business; Eco-Rail-Mark certificate system; privately owned railways (search for similar items in EconPapers)
JEL-codes: L16 L25 L33 L43 L51 L92 R41 R48 (search for similar items in EconPapers)
Pages: 5 pages
Date: 2019-03
New Economics Papers: this item is included in nep-com, nep-tre and nep-ure
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https://www.b.kobe-u.ac.jp/papers_files/2019_3.pdf First version, 2019 (application/pdf)

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