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The Privatisation of the UK Railway Industry: An Experiment in Railway Structure

12 Pages Posted: 13 Jun 2014  

Richard Wellings

Institute of Economic Affairs (IEA)

Date Written: June 2014

Abstract

The British rail network was privatised in the mid‐ to late 1990s. However, the sector was heavily regulated and not permitted to evolve according to market processes. Indeed, the government imposed a complex and fragmented structure on the industry which ran counter to traditional railway practices. As a consequence, economies of scale and scope were lost, while transaction costs were increased. There was a negative impact on costs and safety. Given the disappointing outcomes, there is a strong case for reforming the sector by facilitating the development of a privately owned and vertically integrated rail system.

Keywords: British Rail, fragmentation, privatisation, transaction cost economics, vertical integration

JEL Classification: D23, L14, L33, R48

Suggested Citation

Wellings, Richard, The Privatisation of the UK Railway Industry: An Experiment in Railway Structure (June 2014). Economic Affairs, Vol. 34, Issue 2, pp. 255-266, 2014. Available at SSRN: https://ssrn.com/abstract=2450316 or http://dx.doi.org/10.1111/ecaf.12083

Richard Wellings (Contact Author)

Institute of Economic Affairs (IEA) ( email )

2 Lord North Street
London SW1P 3LB
United Kingdom

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