Is yardstick competition desirable for western European railways?

Dominique Bouf () and Pierre-Yves Péguy ()
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Dominique Bouf: LET - Laboratoire d'économie des transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique
Pierre-Yves Péguy: LET - Laboratoire d'économie des transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper addresses the question of yardstick competition and Demsetz competition for western European railways. To that end it is necessary to compare the performance of various railways. Thus, in the first part of the paper we show that it is, to a certain extent, possible to take into account the various dimensions of performance with a frontier approach. Horizontal separation of formerly state-owned monopolies might lead to yardstick and Demsetz competition. We are addressing in the second part of the paper some of the major issues raised by competitive tendering in a horizontally separated railways network, namely vertical separation, optimal size, duration of the franchises, the sunk costs and the network externalities. Finally, we conclude that it is possible to compare the performance of different railways companies and that horizontal separation enable yardstick competition and Demsetz competition, even if some problems remain to be solved especially for the "core" of the systems.

Keywords: Yardstick competition; Demsetz competition; Western European Railways; Rail Organisation; performance (search for similar items in EconPapers)
Date: 2001
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Published in Rivista Internazionale Di Economia Dei Trasporti = International Journal of Transport Economics, 2001, XXVIII (2), pp. 205-227

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00112183

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