Eric Pels, Free University, Department of Spatial Economics
, Amsterdam, The Netherlands, Francesca Medda, University College London, London, United Kingdom
Rail cost functions - an empirical analysis for European railway companies (assigned to theme
Rail cost function analysis has been a popular topic in the (empirical) economics literature over the past decades. Most studies find increasing returns to density for rail companies, although decreasing returns to density were also reported for individual European companies (Preston, 1994). Pels et al. (2003) calibrate a cost function for a specific European company. While the returns to density parameter shows increasing returns, like so many other papers, the calculated standard errors show that the null hypothesis of constant returns may not be rejected. In this paper we calibrate a cost function for European railway companies, using UIC-data. This dataset was used before (see e.g. Andrikopoulos and Loizides, 1998), and a common conclusion is that European railway companies operate under (in some cases very strong) density economies. In this apper, we extend the dataset to cover a larger period of time (1976-2003), and we calculate standard errors to see whether the returns to density parameters for individual companies actually are (statistically) larger than 1.Understanding the properties of cost functions of railway companies is necessary if one want ot understand the network development of railway companies. It is thus relevant information in an analysis of the optimal structure of the railway sector, but also for station development.
 | Conference organized through conf-vienna
(copyright Gunther Maier) |