Title

PRIVATIZATION AND THE QUALITY OF RAIL SERVICES

Document Type

Journal Article

Publication Date

1995

Subject Area

planning - service quality, organisation - privatisation, organisation - privatisation, mode - rail

Keywords

Service quality, Railroad transportation, Rail transportation, Quality of service, Privatization, Privatisation, Passenger service quality, British Rail

Abstract

Using the concept of generalized costs to reflect quality in rail services, this paper considers the level of provision and quality of these services in the various forms they may take in a privatized environment within a model where we assume linear and separable demand and cost functions for analytical simplicity. Using the Pareto-efficient output and quality outcomes under a fully integrated system for reference (as well as those for a fully integrated profit-maximizing monopolist) the authors show that if either bilateral monopoly or complementary monopoly emerge as a market structure the output of train services and their quality will generally fall. In the case of the emergence of both bilateral monopoly and complementary monopoly this analysis again suggests poor welfare outcomes. The implication that can be drawn from this analysis is that a regulator of a privatized rail system faces some severe problems if he/she is to attain the appropriate welfare targets.

Comments

Transportation Research Part A Home Page: http://www.sciencedirect.com/science/journal/09658564