Abstract

Directive 91/440 prescribes the vertical separation of infrastructure management from transport service provision in the railway sector. The application of the Directive has entailed pricing systems which vary significantly across countries. Directive 2001/14 states that the heterogeneity of tarification systems can have an adverse impact on international traffic. This paper analyzes the strategic choice of an access pricing system by the railroad infrastructure managers of two bordering countries. Each manager maximizes welfare in his country, while ensuring the financial viability of the national railway network. Infrastructures are used by transport operators to provide national and international services. We consider two basic access pricing systems, which lead to charges that differ both in level and in strategic nature. The incentives to the adoption of a particular access pricing system depends on the type of strategic interaction between the infrastructure managers, the fixed costs of the network and the characteristics of transport demand.