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Reforming a publicly owned monopoly: costs and incentives in railway maintenance
Örebro universitet, Handelshögskolan vid Örebro Universitet.
2015 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The railway system is often considered to be an industry where a monopoly occurs “naturally”, which can explain the public ownership and the use of regulations. However, railways in Europe have been subject to reforms during the last three decades. The use of tendering has increased, which is a way of introducing competition for the market in absence of competition within the market. Still, contracting out services previously produced in-house places a heavy burden on the client, where contract design and its incentive structures can be decisive for the outcome of the reform.

This dissertation provides empirical evidence on costs and incentives in a publicly owned monopoly that is subject to reforms, namely the provision of railway maintenance in Sweden.

Essay 1 estimates the effect of exposing rail infrastructure maintenance to competitive tendering. The results show that this reform reduced maintenance costs in Sweden by around 11 per cent over the period 1999-2011, without any associated fall in the available measures of quality.

Essay 2 estimates the relative cost efficiency between and within maintenance regions in Sweden. The results indicate considerable efficiency gaps together with economies of scale not being fully exploited.

Essay 3 analyses the effect of incentive structures in railway maintenance contracts. An increase in the power of the incentive scheme reduces the number of infrastructure failures according to the results. In addition, the estimated effect of the performance incentive schemes suggests that more effort towards preventing train delays is made at the expense of preventing other failures.

Essay 4 comprises an estimation of marginal costs of rail maintenance. The static model produces slightly lower marginal costs compared to previous estimates on Swedish data. The results from the dynamic model show that an increase in maintenance costs in year t - 1 predicts an increase in maintenance costs in year t. Indeed, there is an intertemporal effect that depends on the performed maintenance activities (governed by the contract design).

Place, publisher, year, edition, pages
Örebro: Örebro university , 2015. , 26 p.
Keyword [en]
Railway track, Maintenance, Contract, Incentive (reward), Competition, Cost, Quality, Economic efficiency
National Category
Economics
Research subject
J00 Railway: General works, surveys, comprehensive works, J01 Railway: Railway track; J00 Railway: General works, surveys, comprehensive works, J13 Railway: Economics
Identifiers
URN: urn:nbn:se:vti:diva-12476ISBN: 978-91-7529-106-2 (print)OAI: oai:DiVA.org:vti-12476DiVA: diva2:1153611
Public defence
2015-12-21, Forumhuset, Biografen, Örebro universitet, 10:00 (English)
Opponent
Supervisors
Available from: 2017-10-31 Created: 2017-10-31 Last updated: 2017-11-06Bibliographically approved
List of papers
1. Assessing the Cost Impact of Competitive Tendering in Rail Infrastructure Maintenance Services Evidence from the Swedish Reforms (1999 to 2011)
Open this publication in new window or tab >>Assessing the Cost Impact of Competitive Tendering in Rail Infrastructure Maintenance Services Evidence from the Swedish Reforms (1999 to 2011)
2016 (English)In: Journal of Transport Economics and Policy, ISSN 0022-5258, E-ISSN 1754-5951, Vol. 50, 93-112 p.Article in journal (Refereed) Published
Abstract [en]

This is the first paper in the literature to formally study the cost impact of competitive tendering in rail maintenance. Sweden progressively opened up the market for rail maintenance services, starting in 2002. We study the cost impacts based on an unbalanced panel of thirty-nine contract areas between 1999 and 2011, using econometric techniques. We conclude that competitive tendering reduced costs by around 11 per cent. Importantly, this cost reduction was not associated with falling quality; quite the reverse. We thus conclude that the gradual exposure of rail maintenance to competitive tendering in Sweden has been a success.

Keyword
Cost, Deregulation, Railway network, Maintenance, Competition, Sweden, Quality
National Category
Economics
Research subject
J00 Railway: General works, surveys, comprehensive works, J13 Railway: Economics; J00 Railway: General works, surveys, comprehensive works, J12 Railway: Organization and administration
Identifiers
urn:nbn:se:vti:diva-10123 (URN)000370560500006 ()
Available from: 2016-03-16 Created: 2016-03-16 Last updated: 2017-10-31Bibliographically approved
2. Benchmarking in a publicly owned monopoly: estimating the dual-level cost efficiency of railway maintenance in Sweden
Open this publication in new window or tab >>Benchmarking in a publicly owned monopoly: estimating the dual-level cost efficiency of railway maintenance in Sweden
(English)Manuscript (preprint) (Other academic)
Keyword
Railway track, Maintenance, Performance, Economic efficiency
National Category
Economics
Research subject
J00 Railway: General works, surveys, comprehensive works, J01 Railway: Railway track; J00 Railway: General works, surveys, comprehensive works, J13 Railway: Economics
Identifiers
urn:nbn:se:vti:diva-12478 (URN)
Available from: 2017-10-31 Created: 2017-10-31 Last updated: 2017-11-06Bibliographically approved
3. Contract design and performance of railway maintenance: effects of incentive intensity and performance incentive schemes
Open this publication in new window or tab >>Contract design and performance of railway maintenance: effects of incentive intensity and performance incentive schemes
(English)Manuscript (preprint) (Other academic)
Keyword
Railway track, Maintenance, Contract, Incentive (reward), Performance
National Category
Economics
Research subject
J00 Railway: General works, surveys, comprehensive works, J01 Railway: Railway track; J00 Railway: General works, surveys, comprehensive works, J13 Railway: Economics
Identifiers
urn:nbn:se:vti:diva-12477 (URN)
Available from: 2017-10-31 Created: 2017-10-31 Last updated: 2017-11-06Bibliographically approved
4. Estimating the marginal maintenance cost of rail infrastructure usage in Sweden: does more data make a difference?
Open this publication in new window or tab >>Estimating the marginal maintenance cost of rail infrastructure usage in Sweden: does more data make a difference?
2015 (English)In: Economics of Transportation, ISSN 2212-0122, E-ISSN 2212-0130Article in journal (Refereed) In press
Abstract [en]

This paper updates knowledge about the marginal cost of railway maintenance. Using a panel dataset comprising 16 years, we test whether more data makes a difference to conclusions. In contrast to previous estimates using a shorter panel, maintenance costs are now demonstrated to exhibit a positive dynamic effect; an increase in maintenance cost during one year indicates the need for more maintenance also the next year. Moreover, the marginal cost from the dynamic model is larger than its static counterpart. We conclude that the use of dynamic models on longer time series may have charging implications in several EU member states, considering that their track access charges are based on econometric studies that use static models and short panel datasets.

Place, publisher, year, edition, pages
Elsevier, 2015
Keyword
Economics of transport, Input data, Maintenance, Cost, Mathematical model
National Category
Economics
Research subject
J00 Railway: General works, surveys, comprehensive works, J13 Railway: Economics
Identifiers
urn:nbn:se:vti:diva-11887 (URN)10.1016/j.ecotra.2017.05.001 (DOI)2-s2.0-85019555205 (Scopus ID)
Available from: 2017-06-07 Created: 2017-06-07 Last updated: 2017-10-31Bibliographically approved

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