Rail Economics, Policy and Regulation in Europe

Rail Economics, Policy and Regulation in Europe

Edited by Matthias Finger and Pierre Messulam

The European railway sector has undergone profound and predominantly institutional changes over the past 20 years, due to the initiatives of the European Commission. This book constitutes a first systematic assessment and account of the recent transformations of the industry along a series of critical yet contentious issues such as competition, unbundling, regulation, access charging, standards and interoperability, and public–private partnerships. It also covers the main railways sectors including passenger transport, high speed and freight.

Chapter 10: What does a best practice railway look like?

Chris Nash

Subjects: economics and finance, transport, politics and public policy, regulation and governance, urban and regional studies, transport


The past 30 years have seen major changes in the organization of railways, particularly in Europe, but also in much of the rest of the world. From an era when railways were predominantly vertically integrated and – except in North America – government owned, a wide variety of organizations has evolved, particularly involving the separation of rail infrastructure from operations. Consequently, there is an important need to try to define which approaches constitute best practice in varying circumstances. How do we judge best practice when examining the organization and management of a railway company? This chapter will consider best practice in terms of value for money – that is, the relationship between the benefits the railway gives and its cost. A high level of benefit will be associated with high levels of traffic and market share; however, both market share and system costs depend on many factors that are outside the control of railway policy. Consequently, it is necessary to develop methods of analysis that can separate out the impact of organization and management from that of external factors such as geography, socioeconomics and government policy towards rail and competing modes. Achieving this reliably requires statistical methods that can take data for a number of railways over time and estimate the impact of a variety of causal factors upon performance. Within this, the two essential relationships are demand and cost functions.

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