Competition on the Railway Market in a Segment of Public Service Obligations in Terms of Effectiveness: Study in V4 Countries

Abstract

Since the introduction of new European Union legislation seeking to establish a single European railway area and increase the railway sector’s competitiveness, competition has also become a reality in this, until then, monopoly market. In addition to allowing open access to the railway market with freight and passenger services, competition in the regulated part of the market has been increasing, specifically in the segment of public passenger transport services. Public tendering for providing public services has increased the quality of services for passengers and contracting authorities; however, the question remains whether this model of awarding these services is also effective from a socioeconomic viewpoint. This study focused on evaluating contracting authorities of public services in the Visegrád-4 countries regarding public spending effectiveness. Based on the chosen model inputs and outputs related to performance and value indicators of public service contracts, we calculate individual contracting authorities’ relative effectiveness using nonparametric data envelopment analysis (DEA) models. We subsequently tested assumptions of the difference in effectiveness according to awarding services, individual countries or ownership of railway undertakings. We came to the conclusion that it is not possible to confirm that public tenders in V4 countries significantly increased the effectiveness of public spending in comparison with direct awards or other ways of awarding PSO. Discussions on the main results and research limitations are also part of this paper.

Keywords

• railway market
• competition
• public service obligation
• compensation
• effectiveness