Economies of Scope in European Railways: An Efficiency Analysis
Christian Growitsch () and
Heike Wetzel ()
No 29, Working Paper Series in Economics from University of Lüneburg, Institute of Economics
In the course of railway reforms at the end of the last century, European na- tional governments, as well the EU Commission, decided to open markets and to separate railway networks from train operations. Vertically integrated railway com- panies argue that such a separation of infrastructure and operations would diminish the advantages of vertical integration and would therefore not be suitable to raise economic welfare. In this paper, we conduct a pan-European analysis to investi- gate the performance of European railways with a particular focus on economies of scope associated with vertical integration. We test the hypothesis that integrated railways realize economies of joint production and, thus, produce railway services on a higher level of efficiency. To determine whether joint or separate production is more efficient we apply an innovative Data Envelopment Analysis super-efficiency bootstrapping model which relates the efficiency for integrated production to a vir- tual reference set consisting of the separated production technology and which is applicable to other network industries as energy and telecommunication as well. Our findings are that for a majority of European Railway companies economies of scope exist.
Keywords: Efficiency; Vertical Integration; Railway Industry (search for similar items in EconPapers)
JEL-codes: L22 L43 L92 (search for similar items in EconPapers)
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Working Paper: Economies of Scope in European Railways: An Efficiency Analysis (2006)
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