Horizontal versus vertical separation in railway networks: Implications for network quality

Shana Cui*, David Besanko

*Corresponding author for this work

Research output: Contribution to journalArticle

5 Scopus citations

Abstract

This paper analyzes the relationship between network quality and organizational structure in railway systems. We consider two options: vertical separation and horizontal separation. We derive the Nash equilibrium network qualities in a two-stage game. In general, the comparison of network quality between the two organizational structures is ambiguous. However, unless the regulated access fee under vertical separation is sufficiently large, horizontal separation is likely to dominate vertical separation. This is reinforced if horizontal separation enables service complementarities.

Original languageEnglish (US)
Pages (from-to)78-80
Number of pages3
JournalEconomics Letters
Volume138
DOIs
StatePublished - Jan 1 2016

Keywords

  • Network quality
  • Organizational structure
  • Railway
  • Two-stage game

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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