Scandinavian Working Papers in Economics
Working Papers,
Örebro University, School of Business
No 2005:11: THE ARLANDA AIRPORT RAIL LINK – LESSONS LEARNED FROM A SWEDISH PPP CONSTRUCTION PROJECT
Lars Hultkrantz (), Urban Karlström () and Jan-Eric Nilsson ()
Additional contact information
Lars Hultkrantz: Department of Business, Economics, Statistics and Informatics, Postal: Örebro University, Department of Business, Economics, Statistics and Informatics, SE - 701 82 ÖREBRO, Sweden
Urban Karlström: VTI, Postal: Olaus Magnus väg 35, 581 95 Linköping,
Jan-Eric Nilsson: VTI, Postal: Box 760, 781 27 Borlänge, ,
Abstract: The Stockholm – Arlanda airport rail link is a public-private build-operate-transfer project (sometimes referred to as PPP), opened for traffic in late 1999. At the time of decision in 1993, the project was seen as a role model for funding rail infrastructure; it infused private money into the sector, with a hope of improving cost efficiency performance; it broke up the train service monopoly of the national railway company; and it opened up the sector for ideas and impulses from a new actor.
The paper seeks to identify the costs and benefits of providing a private company with a monopoly franchise over one particular section of the network. It also highlights tradeoffs present in public-private partnerships and in creating facility-based competition within the railroad industry without ex ante regulation of access. Evidence indicates that losses of allocative efficiency, due to that the number of passengers is far below expectations, are substantial. Since available information about construction costs, due to commercial secrecy, is scarce it is not possible to say whether the overall result of this particular PPP project is efficiency enhancing or not. Our best guess is, however, that a radical change in the present pricing strategy may not mean a financial disaster and would boost the prospective of ex post efficiency.
Keywords: public private partnership; public transport; build-operate-transfer; outsourcing; contracting out
25 pages, December 12, 2005
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