Chapter 4: Railways: The National Franchising Alternative
4. Railways: the national franchising alternative INTRODUCTION The principle of contract management, which was a central anchor of Chadwick’s attempt to ‘regulate’ monopolies or non-performing markets, was a broad-based idea. It could be used at all levels of provision, local, regional, or national. The present chapter analyzes Chadwick’s welldeveloped contribution to a new technology that was reaching markets worldwide in the 1830s and following decades of the nineteenth century – railways. Naturally this technology had stark implications for economic analysis.1 It developed into integrated systems, competed with other forms of technology (for example, canal and roadway transportation), and raised problems for economic analysis which had not been emphasized before: the nature of cost conditions, price discrimination, market structure, the meaning of competition and, most importantly, the importance of monopoly and the appropriate governmental response. Edwin Chadwick responded to all of these issues. Naturally, the emergence of railway technology brought on engineering problems as well as new inventions, but Chadwick introduced a different style of analysis to railway economics. There was, of course, a perpetual desire for statistics, but beyond this Chadwick exhibited little interest in the technical or engineering side of railway operations. Rather, he beamed his interests on the sociological, political and, especially, the economic aspects of the field, or in other words, on railway policy. As such, he sought to apply his economic theory of ‘contracting’ to a national industry. THE ESTABLISHMENT AND PROVISION OF EARLY ENGLISH RAILWAYS Transport service between Liverpool and Manchester introduced the railway to England....
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