Priority Rules Versus Scarcity Premiums in Rail Markets
Achim I. Czerny,
Kay Mitusch and
No 10-03, WHU Working Paper Series - Economics Group from WHU - Otto Beisheim School of Management
The regulation of rail network access is a key component of the EU policy that aims to strengthen rail markets. Two specific regulations are proposed: (i) a priority for long-distance (freight) services and (ii) a scarcity premium. Based on a congested network with two rail links, numerical simulations demonstrate that total surplus can be greater under the priority rule, which depends on the network charge per train-kilometer. Consumer surplus, on the other hand, is always greater under the priority rule, while fixed network-cost recovery is easier to achieve if a scarcity premium exists.
Keywords: Rail markets; priority rules; scarcity premiums; congestion; network allocation (search for similar items in EconPapers)
JEL-codes: D42 D45 L92 R41 R48 (search for similar items in EconPapers)
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