Scandinavian Working Papers in Economics

Working Papers,
Swedish National Road & Transport Research Institute (VTI)

No 2007:11: Fixed Effects Estimation of Marginal Railway Infrastructure Costs in Sweden

Mats Andersson ()
Additional contact information
Mats Andersson: VTI, Postal: Dept. of Transport Economics, P.O. Box 760, SE-781 27 Borlänge, Sweden

Abstract: New railway legislation in Sweden has increased the need for transparent access charges on the Swedish railway network. We estimate cost functions for infrastructure operation, maintenance and renewal in the Swedish national railway network, using unobserved effects models and calculate marginal costs for railway infrastructure wear and tear. We find evidence of unobserved fixed effects at a track section level for infrastructure operation and maintenance costs. The estimated weighted average marginal infrastructure operation cost is SEK 0.12 per train kilometre and the estimated marginal maintenance cost is SEK 0.0073 per gross tonne kilometre. Altogether, the results indicate that the current charge for railway infrastructure wear and tear in Sweden is below marginal cost.

Keywords: Railway; Infrastructure operation; Maintenance; Renewal; Marginal costs; Fixed effects

JEL-codes: C23; H54; L92; R48

28 pages, April 25, 2007

Note: This paper replaces 2006:6.

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