Three Principles for Optimal Pricing of Trackage Rights

Kenneth D. Boyer ()
Additional contact information
Kenneth D. Boyer: Michigan State University

Review of Industrial Organization, 2016, vol. 49, issue 2, No 9, 347-369

Abstract: Abstract Borrowing from the literature on optimal road pricing, this paper introduces three efficiency-based principles for setting track access fees. The fundamental principle is that track fees should be set as close as possible to optimal congestion tolls on a track segment. Since this procedure gives an incentive to keep capacity inefficiently low in order to increase congestion tolls, the second principle is that track fees be devoted to paying for track maintenance, the opportunity cost of land, and the amortization of plant and equipment installed on the track. The third principle is that track fees should be set by traffic and cost conditions on a line and should not vary with the identity of the user whose freight is hauled on the line; this third principle is designed to encourage efficient location and mode choice. The combination of these three principles has the promise of increased willingness to use rail logistics systems, the installation of an appropriate level of capacity on each line, and optimal routing and traffic levels throughout the rail system.

Keywords: Railroads; Freight transportation; Infrastructure pricing; Track pricing; Railroad regulation (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11151-016-9518-z Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:revind:v:49:y:2016:i:2:d:10.1007_s11151-016-9518-z

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11151/PS2

DOI: 10.1007/s11151-016-9518-z

Access Statistics for this article

Review of Industrial Organization is currently edited by L.J. White

More articles in Review of Industrial Organization from Springer, The Industrial Organization Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().