A Theoretical Approach to Welfare-Optimal Calculation of Direct Costs in European Rail Regulation

Marco Henseler

Abstract


The regulation of track access charges within the European Union is based on the economic principles of first and second best pricing. In order to obtain an allocative efficiency it is crucial to determine the marginal costs of operating the train services – the so-called direct costs. Even though the Implementing Regulation (EU) 2015/909 specifies the modalities for the calculation of direct costs, a broad range of different values for direct costs can be observed across Member States. However, the discussion of the level of direct costs is driven in particular by econometric, engineering and cost accounting aspects – an economic analysis is missing despite the welfare-
economic concept of track access charges. For that reason, this paper discusses the welfare economic effects of different suitable values for direct costs.
It will be shown that both a welfare maximising first best track access charging and, in most cases, also a second best charging will result in boundary solutions for direct costs. However, it also becomes obvious that from a welfare-economic perspective there is no general recommendation for adopting the lowest suitable direct costs. Any allocatively efficient
regulation of track access charges must consequently consider the specific situation of each market segment separately.


Full Text:

PDF

References


Bugarinović, M., & Bošković, B. (2016). Where does costs coverage and track access charges structure go after Adoption of Regulation 2015/909/EU? International scientific-expert conference on railways (RAILCON’16), Niš.

Crozet, Y. (2018). Track access charges: reconciling conflicting objectives: Case Study – France: logic and limits of full cost coverage. Centre on Regulation in Europe (CERRE), Brussels.

Engelhardt, J. (2018). Theoretical basis for calculation of charges for access to railway infrastructure in the light of European Union law. European Journal of Service Management, 25(4), 81–89. https://doi.org/10.18276/ejsm.2018.25-10

Independent Regulators’ Group - Rail (2012). Position Paper on the concept of cost that is directly incurred. IRG-Rail Position Paper, 12(6). https://irg-rail.eu/irg/documents/position-papers/26,2012.html

Independent Regulators’ Group - Rail (2016a). Initial approach to market segment definition and criteria for an Assessment of Mark-ups in consideration of Directive 2012/34/EU. IRG-Rail Position Paper, 16(7). https://irg-rail.eu/irg/documents/position-papers/22,2016.html

Independent Regulators’ Group - Rail (2016b). An introduction to the calculation of direct costs in respect of implementing regulation 2015/909. IRG-Rail Position Paper, 16(8). https://irg-rail.eu/irg/documents/position-papers/22,2016.html

Independent Regulators’ Group - Rail (2016c). Updated review of charging practices for the minimum access package in Europe. IRG-Rail Position Paper, 16(10). https://irg-rail.eu/irg/documents/position-papers/22,2016.html

Independent Regulators’ Group - Rail (2020). Review of charging practices for the minimum access package in Europe. IRG-Rail Position Paper, 20(10). https://irg-rail.eu/irg/documents/position-papers/263,2020.html

Lindberg, G. (2009). CATRIN (Cost Allocation of TRansport INfrastructure cost). Deliverable D 12, Conclusions and recommendations, VTI, Stockholm.

Link, H. (2018). Track access charges: reconciling conflicting objectives: Case Study – Germany. Centre on Regulation in Europe (CERRE), Brussels.

Marschnig, S. (2018). Direct Costs – a first Benchmark. Track Access Charges Summit (2018, April 4), Amsterdam.

Marschnig S., Vidović, I., & Brantegger, M. (2019). Trassenpreise auf Basis der Richtlinie 2012/34/EU – ein erster Benchmark. Der Eisenbahningenieur, 6, 6–8.

Nilsson, J.-E. (2018). Track access charges: reconciling conflicting objectives: Case Study – Sweden: Track access charges and the implementation of the SERA directive – promoting efficient use of railway infrastructure or not? Centre on Regulation in Europe (CERRE), Brussels.

Odolinski, K., & Nilsson, J.-E. (2017). Estimating the marginal maintenance cost of rail infrastructure usage in Sweden; does more data make a difference? Economics of Transportation, 10, 8–17. https://doi.org/10.1016/j.ecotra.2017.05.001

Sternad, M., Jagrič, T., & Rosi, B. (2017). Estimating marginal infrastructure cost in new infrastructure charging model. Technical Gazette, 24(3), 829–836. https://doi.org/10.17559/TV-20160218095139




DOI: https://doi.org/10.5296/jpag.v11i1.18282

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Journal of Public Administration and Governance  ISSN 2161-7104

Copyright © Macrothink Institute

'Macrothink Institute' is a trademark of Macrothink Institute, Inc.

To make sure that you can receive messages from us, please add the 'macrothink.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.