ECONOMIC-EFFICIENCY OF RAILWAYS AND IMPLICATIONS FOR PUBLIC-POLICY - A COMPARATIVE-STUDY OF THE OECD COUNTRIES RAILWAYS

This paper attempts to identify the effects of government intervention and subsidisation on the productive efficiency of those railways which derive a high proportion of their business from passenger services. In particular, the productive efficiency of the railway systems in 19 OECD countries is measured and analysed in order to identify the effects of both public subsidies and the degree of managerial autonomy on efficiency. The empirical results show that: (i) railway systems with high dependence on public subsidies are significantly less efficient than similar railways with less dependence on subsidies; (ii) railways with a high degree of managerial autonomy from regulatory authorities tend to achieve higher efficiency.