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The marginal cost of track renewals in the Swedish railway network: Using data to compare methods

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  • Odolinski, Kristofer
  • Nilsson, Jan-Eric
  • Yarmukhamedov, Sherzod
  • Haraldsson, Mattias

Abstract

We analyze the differences between corner solution and survival models in estimating the marginal cost of track renewals. Both approaches describe the renewal process in intuitively similar ways but have several methodological distinctions. Using Swedish data for the 1999–2016 period, results suggest the median marginal costs per gross ton-km from corner solution and survival models are SEK 0.0066 and SEK 0.0031, respectively. Since several European countries use information about marginal costs as a basis for track user charges, the choice of estimation method is obviously important. Our conclusion is that the corner solution model is more appropriate in this case, as this method considers the impact traffic has both on the probability of renewal and on the size of the renewal cost. The survival approach does not consider the latter as part of the estimations, which is problematic when we have systematic cost variations due to traffic and infrastructure characteristics.

Suggested Citation

  • Odolinski, Kristofer & Nilsson, Jan-Eric & Yarmukhamedov, Sherzod & Haraldsson, Mattias, 2020. "The marginal cost of track renewals in the Swedish railway network: Using data to compare methods," Economics of Transportation, Elsevier, vol. 22(C).
    • Handle: RePEc:eee:ecotra:v:22:y:2020:i:c:s2212012218301187
    DOI: 10.1016/j.ecotra.2020.100170
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    References listed on IDEAS

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    5. Odolinski, Kristofer & Nilsson, Jan-Eric, 2016. "Estimating the marginal maintenance cost of rail infrastructure usage in Sweden; does more data make a difference?," Working papers in Transport Economics 2016:27, CTS - Centre for Transport Studies Stockholm (KTH and VTI), revised 13 May 2017.
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    Cited by:

    1. Odolinski, Kristofer & Smith, Andrew & Wheat, Phill & Nilsson, Jan-Eric & Dheilly, Clement, 2023. "Damage or no damage from traffic: Re-examining marginal cost pricing for rail signalling maintenance," Transport Policy, Elsevier, vol. 131(C), pages 13-21.

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    More about this item

    Keywords

    Railways; Renewal; Survival model; Corner solution model; Two-part model; Marginal cost;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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