Regulatory approaches to rail competitive entries

Abstract

This paper reviews the regulatory approaches to open access passenger rail competition. This kind of competition has developed substantially in the EU during the past decade. There have been major entries into the national main lines in Italy, Austria, the Czech Republic, and Sweden. These entries have been very popular with passengers and rail ridership has gone up substantially. However, there have also been costs to these entries. The operations of the new entrants are diminishing economies of density, leading to higher unit costs. Further challenges include cherry-picking behaviour, scarce infrastructure capacity, tariff disintegration, and long-term sustainability. The major question is whether the social benefits outweigh the costs. This paper aims to review emerging evidence in the field of open access entries and approaches to their regulation. The scope of this paper is open access passenger rail entries in Europe after 2000 with a particular emphasis on the major entries that took place in Italy, Austria, the Czech Republic, and Sweden after 2011. The contribution of this article to the existing literature is threefold. Firstly, it provides an up-to-date review of open access entries in Europe. Secondly, it combines the results of simulation studies with empirical evidence to provide an overview of market impacts. Lastly, it reviews the spectrum of regulatory approaches.