Competition in railway monopolies

The transformation of railways from monopolies to markets open for internal competition is described and explained in a theoretical framework, and a model for the evaluation of the transformation’s impact on efficiency is developed. Using the model in an empirical study of the Swedish railway sector, it is found that external competitive pressure is strong in most supply segments and, focusing on loss of scale advantages, that the transformation will result in significant costs. Comparing the potential for gains by competition against the costs, it is concluded that increased efficiency by internal competition only seems possible to achieve for two train products: domestic combined transport and dedicated trains (both freight services).