European railways: Liberalization and productive efficiency.

Abstract

The EU Commission launched its rail liberalization policy around 2002 and since then it has been a policy extensively analyzed by the economic literature, but with unclear conclusions. Many studies are based on a loose concept of rail liberalization, which entwines legal reforms, vertical disintegration and the introduction of competition into simple dummy-variables. In this paper, we estimate efficiency frontiers based on different methodologies to analyze the relative position of 27 European rail systems. Efficiency scores are afterwards analyzed with a Tobit model, using several dimensions of the rail liberalization process plus some structural variables as explanatory factors. Our findings indicate that, globally, there is a weak positive link between EU rail liberalization and higher efficiency, and that effective competition is the most relevant factor to achieve efficiency gains. However, for some EU countries, measures adopted to liberalize railways may have resulted in lower levels of efficiency.