The European Railway Sectors: Understanding and Assessing Change

Giovanni Esposito (g.esposito@ulg.ac.be), Julia Doleschel (julia.doleschel@wu.ac.at), Tobias Kaloud (tobias.kaloud@wu.ac.at), Marco Mariotti (mm.mariotti@gmail.com) and Jadwiga Urban-Kozłowska (jadwiga.urban@uj.edu.pl)

Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano

Abstract: This paper aims at explaining and assessing the process of change that European railway sectors have experienced over the last decades. It has been organized in two parts: the first part (section 2) explains change and the second part (section 3) empirically assesses change. In the first part we argue that the roots of this change process date back to the 1950s when, because of competitiveness reasons, the market share of most European railways began to decrease compared to other transport modes. Since national reformers ascribed these performance shortcomings to the traditional organization of the railway sector which was that of vertically-integrated state- owned monopoly. Therefore, between the 1970s and 1980s many governments in Europe adopted reforms that tried to inject competition in national railway sectors by supporting liberalization policies. Then, since early-1990s the European Commission has released a number of regulatory instruments aimed at pursuing three main goals: 1) liberalization of the rail services; 2) unbundling of infrastructure and service level, and 3) creation of the common transport market. The empirical analysis conducted in the second part of this paper suggests that state-controlled structures still play a crucial role in the management and performance of national railway industries as lower service prices are associated with greater presence of the state in the sector. Results show that liberalization-friendly regulation does not necessarily benefit railway service consumers since increased levels of market access, unbundling and privatization are not necessarily associated with lower prices. Our analysis shows that the long-lasting transition from state-owned monopolies to competitive market arrangements in the railway sectors provided mitigated results. We conclude this paper by launching a reflection on the future developments of railways in Europe.

Keywords: Railway sector; Liberalization; ECTR indicator; EU regulation; State-owned enterprise; Paradigm; Reform (search for similar items in EconPapers)
JEL-codes: C10 L32 L38 L92 P11 (search for similar items in EconPapers)
Date: 2017-01-02
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