Ex post economic evaluation of open-access competition in high-speed rail: Welfare gains, financial sustainability and policy implications from Spain

Abstract

This paper provides an ex post economic evaluation of the liberalisation of high-speed rail (HSR) passenger services in Spain, one of the largest open-access rail reforms implemented in Europe to date. Following the entry of multiple operators between 2020 and 2023, the Spanish HSR market experienced substantial changes in prices, demand, modal allocation and operator performance, offering a valuable setting to assess the economic consequences of competition in a capital-intensive transport network.

Using a reduced-form difference-in-differences framework and corridor-level data, we document changes in fares, passenger volumes and modal shares following the introduction of open-access competition. Average fares on liberalised corridors declined by approximately 30 per cent relative to pre-liberalisation levels, accompanied by a strong expansion in demand and significant diversion from air transport on medium- and long-distance routes.

The paper combines these observed price and demand changes with standard valuation parameters from the transport economics literature to conduct a comprehensive accounting of the welfare implications of the reform. The empirical analysis is embedded within a theoretical framework of vertically related markets, linking downstream price competition to upstream access pricing and infrastructure cost recovery. Consumer surplus gains and external benefits from modal shift appear to outweigh the financial losses incurred by operators and the increase in delay-related costs, suggesting positive net social welfare effects, with scenario-based estimates in the order of €360–410 million per year.

The findings highlight both the potential welfare benefits and the economic trade-offs associated with open-access competition in high-speed rail. They underline the importance of infrastructure capacity management, access charging and long-run cost recovery mechanisms for ensuring the financial sustainability of liberalised rail markets. The Spanish experience provides policy-relevant insights for countries considering similar reforms in high-speed and conventional rail services.