Competiton and regulation in the railway industry

The railway industry has foregone important changes in the last years, due to the European reform aimed at its liberalization. A number of studies analyze the qualitative differences across countries, because each Member State has some degree of discretion as the European directives provide only for the main principles (Seabright, 2003; Newbery, 1999; Gomez-Ibanez, 2003; Gomez-Ibanez e De Rus, 2007). But as for the effect of the reform, the analysis are still limited (Friebel, 2008; Quinet, 2006; Schmutzler and Lalive, 2008) and also from a theoretical point of view, only few papers consider the railway industry (De Villemeur et al. 2003). Therefore, the aim of the thesis is to investigate some interesting and important aspects of the railway sector. In particular, I first focus on the role of private or public ownership to incentive investments in rolling stock and second on the issue of public service obligations. The thesis is organized as follows: the introduction illustrates main provisions of the European reform and highlights the characteristics of the sector. The first chapter reviews the literature on public-private partnerships with reference to the issue of bundling or unbundling of different phases of a project. The interest for this kind of arrangement is related to the question of how to solve the problem of scarcity of rolling stock that appears to affect the competitive selection of the service provider. In the second chapter I present a model to study what the effect of the ownership of the rolling stock is on the incentive of the provider of the service to invest also in the case of asymmetric information over the cost. In this latter case a trade off emerges between the effect of the investment and the rent from asymmetric information In the second part of the thesis I analyze the issue of public service obligation. In chapter three I present a review of the literature about the universal service, a concept close to public service obligation but formally applied only in the telecommunications and in the postal sector. In the forth chapter, I consider the effect of PSO on total welfare according to different market structures and in particular when a PSO fund is set up. I analyze welfare effect both under complete information and under asymmetric information over demand. It appears that the set up of a PSO fund grants welfare gains also under asymmetric information.