Separability and Subadditivity in Australian Railways

To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1475-4932.2008.00449.x Byline: NICK WILLS-JOHNSON (1) Keywords: L11; L52; L92 Abstract: Economic reform in the mid-1990s saw the application of third-party access to railway infrastructure and, in some cases, the separation of above-rail and below-rail services into separate businesses. Reform was based on the notion that the rail track was a natural monopoly, while the above-rail sector could potentially support competition. This paper examines the likelihood of such competition through an analysis of subadditivity, and also the consequences of vertical separation for rail efficiency. It finds limited evidence for sustainable above-rail competition, but also limited evidence that vertical separation should have caused efficiency losses. Author Affiliation: (1)Planning and Transport Research Centre, Curtin University of Technology, Perth, Western Australia, Australia Article note: Correspondence: Nick Wills-Johnson, Curtin University of Technology, GPO Box U1987, Perth, WA 6845, Australia. Email: n.wills-johnson@curtin.edu.au