Towards a liberalised European rail transport: Analysing and modelling the impact of competition on productive efficiency

• Published in: Research in transportation economics 2016-11, Vol.59, p.358-367
• Main Authors: Bougna, Emmanuel, Crozet, Yves
• Format: Article
• Language: English
• Subjects: Competition; Distance function; Economics and Finance; Humanities and Social Sciences; Kruskal–Wallis test; Liberalization; Productive efficiency; Productivity; Railway
• ISSN: 0739-8859; 1875-7979
• DOI: 10.1016/j.retrec.2016.07.014

This paper contributes to the railway benchmarking literature in three ways. Firstly, we used the stochastic distance function to measure productive efficiency and productivity change while considering multiple outputs in the railway sector. This method is less used among the studies that compare the performance of railway. Secondly, we calculate the evolution and decomposition of the total factor productivity for European railway. The average rate of productivity showed a slight annual improvement of 27% and the core engine of this was a 25% increase in technical progress. Results by country identify those needing improvement, to be more attractive. Finally, we use a limited dependent variable model to test the impact of rail liberalization process on productive efficiency. Results show that competition tendering improves productive efficiency, whereas free entry delivers the opposite result. Our results also show that competition and the overall liberalization have no impact on productive efficiency. It seems that liberalization process in not the key success factor for the railway industry. Our suggestion is that, in Europe, instead of focusing on rail liberalization process, policy maker should give priority to productivity gains.