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Restructuring railways in Europe : regulation to supplement market mechanisms

Abstract : In an objective to revitalize the sector, railways in Europe have gone through changes in order to introduce competitive forces in an industry previous lydominated by state monopolies. Not unlike what occurred in other network industries, the upstream management of infrastructure -considered a natural monopoly- was separated from the downstream market of train services which was deemed contestable. But the experience from previous reforms shows that the markets stemming from this new organisation are made and don’t necessarily just happen.This dissertation preys on those changing times to analyse how such transition can be achieved. More specifically, it uses the framework developed by the Theory of the Firm to investigate some of the challenges that have risen to investigate some of the challenges that have risen from this new organisation due to vertical separation and the need to develop coordination. Then using the tools developed by Agency Theory, the dissertation investigates the introduction of tendering in public procurement for rail services.Throughout the analysis, an emphasis is put on finding how regulation can provide a remedy to the identified challenges. In chapter 1, we review how the reforms were designed in Europe. It highlights that there was very various applications across countries on several dimensions such as the vertical structure, regulation or downstream competition, triggering debates on the relative merits of each option.relative merits of each option.Furthermore this plurality questions the motivations behind these choices. And although those motivationsare brought up in the literature, the previous empirical studies do nottake them into account when comparing the relative performance of one form against the other. In such a case, endogeneity might come and biased the results of econometric regressions. Having constructed a database covering four years between 2009 and 2012 in 25 European countries we use a two-stageleast-square model to obtain an unbiased estimate of the effects of the abovementioned dimensions. In conclusion, we find that endogeneity does create abias, in particular when measuring the merits of full separation. Chapter 2 builds on the French rail sector’s example to shed the light on the crucial and understudied impact of coordination costs, one of the drawbacks arising with separation in the sector. We develop a model explaining why inefficient outcomes may arise in the railway sector when vertically separated firms have to commit ex ante on quantities. Our results indicate that credible and effective price regulation can overcome the limits of separation on the infrastructure side. On the other hand, if the market is not flexible enough, it may become harder, as the downstream market is becoming more competitive, for train operators to make optimistic production forecasts.
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Jean-Christophe Thiebaud. Restructuring railways in Europe : regulation to supplement market mechanisms. Business administration. Université Panthéon-Sorbonne - Paris I, 2016. English. ⟨NNT : 2016PA01E007⟩. ⟨tel-01534049⟩



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