Vertical and Horizontal Separation in the European Railway Sector and its Effects on Productivity

The processes of vertical and horizontal separation within the railway sector are relatively recent in many European countries, and as a result, little analytical research has been carried out on their impact. The purpose of this paper is to analyse the effects of these organisational reforms on efficiency, productivity, and technical change in sixteen national railway systems in Europe over the period 1985-2005. Results indicate that in general, the reforms appear to have been beneficial in terms of efficiency and productivity, and particularly when measures of vertical separation are combined with the entry of new operators in the freight sector.