Developments in Transport Policy

This paper examines the development of public policy towards on-rail competition in the provision of passenger rail services in the privatised and restructured railway industry in Great Britain. It shows that policy has sought to restrict on-rail competition in order to ensure the maximum possible reduction in public subsidy to passenger rail operations through competition for passenger franchises. Policy has been implemented through a combination of tight regulatory constraints on entry and regulation of price competition on routes where two or more franchised train operators compete. Recent developments in policy suggest that industry regulators envisage little scope for relaxing these constraints despite evidence of consumer benefits in areas where a degree of onrail competition prevails.