• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
Page
  1. 1
    1
  2. 2
    2
  3. 3
    3
  4. 4
    4
  5. 5
    5
  6. 6
    6
  7. 7
    7
  8. 8
    8
  9. 9
    9
  10. 10
    10
  11. 11
    11
  12. 12
    12

The Rail Industry.

Extracts from this document...

Introduction

31 101 Economics I - General Essay The Rail Industry Table of Contents 1 The State of the Railways 2 1.1 The History of the railways in the UK 2 1.2 The UK Railways Since Privatisation 3 1.3 The Current Status Of Regulation Of UK Railways 3 2 The Economic Case for Regulation of a Monopoly 5 3 Assesment of Regulatory Requirements 6 3.1 Areas Governed by Competition 6 3.1.1 The Case for Privatization / Competition 6 3.1.2 Competition Applied to the Rail Industry 6 3.2 Areas Requiring Direct regulation 7 3.2.1 The Case For State Regulation 7 3.2.2 The Case For State Ownership 8 1 The State of the Railways 1.1 The History of the railways in the UK The 1921 Railway Act enabled 123 private railways to be merged into just four geographic groups The London, Midland and Scottish Railway, The London and North Eastern Railway, The Great Western Railway and The Southern Railway. During the Second World War the British government took control of the nation's railways in order to ensure the transport of men and materials to aid the war effort. The transport act of 1947 nationalised the railways and set up The Railway Executive. ...read more.

Middle

Therfore there is a requirement some form of regulation to control the price and level of service in the railways, especially considering the levels of subsidy paid to the railways under the current situation. It would not be prudent to re-privatize the functions of Network Rail and the status quo should remain. Railtrack is widely accepted as being a failure, primarily in terms of its finances. In one week Railtrack announced losses of �300 million and proposed to pay out a dividend to shareholders of �100 million. Under the current set-up (Network Rail) this dividend could have been re-invested into the rail infrastructure. Railtrack attempted to introduce competitive tendering in the maintenance of the railway infrastructure with little success. Poor communication between contractors was cited as a contributory factor in the delays in maintenance that led to the Hatfield derailment of October 2000. The diagram above depicts the number of fatalities on the railways in a given year / period. Looking at the brief period the privatized Railtrack was in charge of rail maintenance (between 97/98 - 2001/2002) there are an alarming number of fatalities around this time. This is an indication that profit may not be the best driver for the organization in charge of track maintenance. ...read more.

Conclusion

Another problem arises with the consideration of ticketing. The above suggestion would almost certainly be unworkable due to the complexity of finding connecting services with the same operator or buying several tickets with several TOCs for one journey. At the moment tickets are sold from A to B and are valid on any TOC. The current situation eliminates competition on price. It may be possible for the private sector to invest in expansion of the rail infrastructure in certain highly congested areas, this has been achieved already on the road network with the introduction of the M6 Toll near Birmingham. The competitive tendering of ancillary services, such as cleaning and food and beverage provision (of both rolling stock and in stations) would be a feasible one. The only objection may be the provider of food may well operate it's own monopoly on a train forcing up prices. This, however, is a minor objection. The SRA is currently involved in the process of replacing all the passenger rail franchises that are due to expire by 2004. The SRA has created new long-term franchise contracts of up to 20 years. This introduces the incentive for the TOCs to invest in the railways for the long term, although this may reduce the authority of the SRA to regulate the operators. 31 101 Economics I Page 0 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Markets & Managing the Economy section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Markets & Managing the Economy essays

  1. Marked by a teacher

    Supermarkets in UK - An oligopily

    5 star(s)

    This is because they would have to spend a lot of money on advertising, a sunk cost, which as explained above reduces the level of contestability in a market Levels of Profit If a firm is making very high profit, this is an indication that the market is not contestable,

  2. Evaluate the role played by barriers to entry in the long run

    That is P=MR=AR . What is long run and why is it different to short run? "The short run is a period of time in which one some variables change or economic processes work."

  1. Finance and Foundings in Tourism Industry

    They are the opposite of current assets. Current liabilities includes things such as short term loans, accounts payable, dividends and interest payable, bonds payable, consumer deposits, and reserves for Federal taxes. The most important part of a balance sheet is a company's working capital (or "current") position.

  2. What is a Monopoly?

    of the consumer: The main case against a monopoly is that these businesses can earn higher profits at the expense of allocative efficiency. The monopolist will seek to extract a price from consumers that is above the cost of resources used in making the product.

  1. Monopoly. The following is going to discuss that monopoly is always against the ...

    However there are some consumer benefits lost altogether and shown by the green shaded area EBF. This is known as the deadweight welfare loss. P=MC and deadweight loss demonstrate the allocative inefficiency of monopoly. In addition, the monopolist does not produce where the AC curve is minimised; it is represented by point G.

  2. What are the major economic functions of government in transition economies? Should government play ...

    macroeconomic conditions is: falling output levels, high and in most cases hyper-inflation, soaring unemployment, deficit on balance of payments and devaluating currency. In order to supply the public good of macroeconomic stability2 government in transition economies needs to carry out the following tasks: enforcing hard budget constraints, establishing price and

  1. TransEcon has been commissioned to conduct a research study into the strategic issues facing ...

    Railtrack came close to bankruptcy due to the enormous cost of additional safety measures and was effectively re-nationalised, when ownership of the railway system was transferred to the newly-created "not for profit" company limited by guarantee, Network Rail on October 3, 2002.

  2. What Are The Effects Of Tescos Oligopolistic Market Structure, On Both Consumers And Producers?

    Others regard it as a threat with excessive market share, which takes over entire towns and convenience stores. Economists have described it as 'Jekyll and Hyde Tesco.' Using this phrase, we can ask whether the Competition Commission has seen the Jekyll Tesco or Hyde Tesco over the 17 month investigation of groceries markets which continued until 30th October 2007.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work