Railway regulation: a comparative analysis of a diverging reality

Abstract

Railway regulation is being evaluated all around the world. Over the past 40 years, regulatory reform has transformed railway systems in the most developed nations. Despite divergences in railway systems and the resulting divergences in regulatory reform, many countries are now evaluating the results and thinking about ways forward. The nations that lead in railway reforms, such as the United States, the United Kingdom and Japan, are now evaluating the results. The European Union, in turn, is completing the liberalization of the rail sector. Other countries are considering whether to implement similar reforms, at the same time as experimenting with their own transformations, with interesting lessons for everyone. The aim of this book is to provide readers with a comprehensive perspective on the debates about railway regulation across the world. Leading academics and practitioners from the main railway countries present the results of 40 years of railway regulatory reform. The chapters describe the current challenges in railway regulation, as well as suggestions for how to address them. Specific chapters are devoted to the most relevant challenges in railway regulation – namely, high-speed services, financing, tendering, technical specifications, digitalization, consumer protection, and the application of competition law. The scope of this introductory chapter is to provide an analytical perspective on the evolution and the challenges in matters of railway regulation in the world’s main railway countries. To this end, we naturally rely heavily on the different contributions to this book. In the book we will identify common themes, but more importantly, explain the divergences in railway regulation. We posit that these divergences emerged mainly after competition from road and later from aviation took place. Subsequently, many countries undertook railway reforms, the nature of which can typically be explained by the policy choices made by the different countries. In other words, and especially in railways, one size does not fit all. The remainder of this introductory chapter is structured as follows: in the next section we will describe the evolution of railways from its origins in the UK to “peak rail” in the early 20th century. In most countries, railways were initially built and operated by private companies: governments sometimes financially supported their construction, but most often granted concession to private companies who were in the lead. As railways became increasingly important for national development, whether in terms of transporting raw materials (such as coal), manufactured goods, or people, the national rail network grew denser and railways became subject to government regulation due to market abuse, high rates, and discriminatory rebates. In some countries, railways were even nationalized. The main differences between countries during this period concern the degree to which the network was developed. Section 1.3 describes how railway systems declined due to competition, first from road and then from aviation. Around the 1940s and 1950s, railway companies across the world were