Abstract

Recent EU legal provisions, aimed at introducing the liberalisation of the railway sector, acknowledge the existence of a public service obligation for non profitable routes, which would otherwise not be offered in the case of liberalised market. Italian national law does not give detailed explanations on how to define the extent of the obligations, their financial value and their funding. The aim of this paper is to analyze the issue of public funding of railway service in the context of a liberalized market from an economic, regulatory and institutional point of view. After comparing the organizational structures of the railways sector in different European countries, we discuss some methodological guidelines to define the level of public intervention and its allocation and to determine the more efficient funding mechanism to apply.