Discussion Papers

Gernot Müller

Zur kostenbasierten Regulierung von Eisenbahninfrastrukturentgelten – Eine ökonomische Analyse von Kostenkonzepten und Kostentreibern

Nr. 301 / Dezember 2007

Summary

In Germany, regulation of railway infrastructure charges has been implemented as a cost-based method resting upon costing data. Most relevant for determining and examining user charges for rail infrastructure is sec. 14 par. 4 of the General Railway Act. Rail infrastructure managers have to set their charges in a way that total costs resulting from the provision of obligatory services including a reasonable rate-of-return can be recovered. Starting point for the calculation of charges are the costs directly accruing from train operation. To fulfil the requirement of cost recovery, mark-ups differentiated with respect to rail transport modes and market segments can be added. The structure and wording of the provisions implicate contradicting results of the legal interpretation of the regulations. For this reason, a microeconomic and business economic underpinning of the legislative provisions is indispensable. Defining, explaining and exposing the problems of costing methodologies contribute to the interpretation of costing systems, the scrutiny and analysis of costing data, as well as to the determination and allocation of total costs. In addition, the relevance of costing methodologies to the railway infrastructure sector and the results of empirical studies are to be examined. The following concepts are presented: user costs of capital, operating costs, disruption costs, capacity costs, environmental costs, accident costs, fixed and variable costs, product-related, joint and overhead costs, average and fully distributed costs, marginal and incremental costs, Ramsey- based charges, and costs of efficient service provision. Considering cost drivers is helpful in identifying marginal or incremental costs and allocating common costs.

It can be derived that a cost-based regulation of railway infrastructure charges should be started with a determination of total costs accruing from the provision of obligatory services. In particular, joint and overhead costs have to be allocated appropriately. In this context, user costs of capital resulting from public investments in rail infrastructure and a reasonable rate-of-return have to be considered. Consecutively, single charges can be calculated basing on adequately differentiated short-run marginal or incremental costs related to the provision and use of railway infrastructure. To ensure cost recovery it makes good economic sense to add mark-ups to marginal cost charges applying the inverse elasticity rule. This method offers the possibility to differentiate according to modes of transport, the degree of intra- and intermodal competition, spatial and temporal criteria, as well as personal and factual characteristics. [only a german version available]

Discussion Paper is available for download.

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