Economic impacts of Swedish railway deregulation: A longitudinal study

Vertical separation between infrastructure service provision and the operation of trains is one important element in the Swedish deregulation process. Another is the introduction of various forms of competition. In this paper, we study the economic development of the Swedish railway and explore if and how the deregulation has affected cost efficiency. We use a longitudinal econometric approach in our study and conclude that vertical separation raises costs, and also that the introduction of competition lowers costs. The combined effect seems to be an improvement in cost efficiency as an impact of the deregulation process. The study also gives some results on lagged relationships between output and costs in railways with mixed passenger and freight services and provides a methodological approach for causal research on the relationship between railway deregulation and costs.