Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

Abstract: In this paper, we extend to the literature on marginal wear and tear cost estimation in railways, by applying a panel vector autoregressive model to rail infrastructure renewals and maintenance costs, using an extensive dataset from Sweden. This study is significant given the inherent difficulties in modelling the substantial renewals element of infrastructure costs, as well as the need to account for the dynamics in renewals and maintenance. The dynamic model allows us to estimate equilibrium cost elasticities with respect to train usage, which are significantly larger than their static counterparts. Overall, this work highlights that dynamics in rail infrastructure costs are important to consider when setting track access charges with respect to the wear and tear caused by traffic. This is particularly important given several countries, for example France, Sweden and Switzerland, are now setting access charges at marginal costs based on econometric studies.

Keywords: Rail infrastructure; Renewal; Maintenance; Panel vector autoregression; Marginal cost; Impulse response analysis

JEL-codes: L92; R48

10 pages, First version: November 25, 2016. Revised: December 11, 2017. Earlier revisions: December 11, 2017.

Note: Published in Economics of Transportation, Volume 14, June 2018, Pages 21-30.

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