Creating a National Champion: International Competition and Unbundling in Rail Transportation

Steffen Juranek

Journal of Transport Economics and Policy, 2016, vol. 50, issue 1, 56-75

Abstract: This article investigates the incentives to unbundle operations and infrastructure in the railway industry in a two-country model from the viewpoint of national governments. The analysis shows that the decision to unbundle institutionally or organisationally with separated accounts depends crucially on the importance of cross-border transportation. If cross-border transportation is sufficiently important, national governments choose accounting separation. However, for low-efficiency gains within a bundled firm, national governments are stuck in a Prisoner's Dilemma and would be better off coordinating on institutional separation. This result justifies major policy initiatives of the European Union and explains the behaviour of national governments. © 2016 LSE and the University of Bath

Date: 2016
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Working Paper: Creating a National Champion: International Competition and Unbundling in Rail Transportation (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:tpe:jtecpo:v:50:y:2016:i:1:p:56-75

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