Marginal Cost Pricing of Railway Infrastructure Operation, Maintenance, and Renewal in Sweden

Abstract

The separation of infrastructure and train operations in Europe's railway sector has increased the importance of a transparent policy for pricing infrastructure use. This paper reviews the quality of data on the Swedish railway network to allow estimation of the marginal costs of railway track wear and tear. Information about costs, traffic, and infrastructure is examined and assessed in light of an econometric modeling approach. The review shows that the basic data necessary to estimate an econometric cost function are not always at hand. In particular, no extensive time series data are available, and there are instances of partially missing data. However, some problems can be overcome through the use of data imputation techniques. A database covering 749 track section observations from 1999 to 2002 was created. Cost functions were estimated via pooled ordinary least squares, and marginal costs were calculated. Separate charging regimes for operational and maintenance costs are suggested, but more research is needed before renewal costs can be recommended for inclusion.