Chinese Railway Reform and Competition: Vertical or Horizontal Restructuring?

US Department of Justice, Antitrust Division, Economic Analysis Group Working Paper No. 02-2

26 Pages Posted: 15 May 2002

See all articles by Russell W. Pittman

Russell W. Pittman

U.S. Department of Justice - Economic Analysis Group; Kyiv School of Economics; New Economic School (NES)

Date Written: March 2002

Abstract

One of the key determinants of China's ability to continue its economic growth into the 21stcentury and to distribute the benefits of that growth to a broad spectrum of the population will be the further development of its railroad system. This paper examines the possibilities for improving the performance and increasing the capacity of China's railroad system through the introduction of competition. Countries throughout the world are in the process of abandoning the centralized, monopoly, state-owned model of the railway in favor of models that create competition. However, different competitive models have been proposed and are being tried out. This paper discusses the reform experience with the two basic models and their variations, focusing especially on some of the operational and regulatory challenges that vertical separation is now better understood to impose. It seeks to apply the lessons of the experience to date to the situation of China, where -- unlike in many countries, developing and developed -- one important criteria for choosing a reform model is its ability to provide the incentives for appropriate levels of new investment to be undertaken at the appropriate locations. The paper closes with the presentation of one possible reform model for the Chinese rail system, a model that maintains vertical integration while creating competition for shippers at many important origin and destination points.

Keywords: China, railroad, infrastructure, reform, restructuring, competition

JEL Classification: L43,L92,O14,P25

Suggested Citation

Pittman, Russell, Chinese Railway Reform and Competition: Vertical or Horizontal Restructuring? (March 2002). US Department of Justice, Antitrust Division, Economic Analysis Group Working Paper No. 02-2, Available at SSRN: https://ssrn.com/abstract=308588 or http://dx.doi.org/10.2139/ssrn.308588

Russell Pittman (Contact Author)

U.S. Department of Justice - Economic Analysis Group ( email )

450 5th St. NW
Antitrust Division
Washington, DC 20530
United States
202-307-6367 (Phone)
202-307-3372 (Fax)

Kyiv School of Economics ( email )

vul. Yakira, 13, 3d floor, suite 334
Kyiv, 04119
Ukraine

New Economic School (NES) ( email )

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Moscow, Skolkovo 143026
Russia

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