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The Franchising of Passenger Rail Services in Britain

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  • John Preston
  • Gerard Whelan
  • Chris Nash
  • Mark Wardman

Abstract

Following the 1993 Railways Act, British Rail's passenger business was spilt into 25 train operating units, which have been privatised by a process of franchising. This paper will review the franchising experience to date. First, the results of 38 in-depth interviews with potential bidders for the passenger businesses will be described. Secondly, a hypothetical bidding game, based on a series of Stated Preference experiments undertaken by our sample of potential bidders, will be described. A model has been established which determines managers' preferences with respect to contract size and length, exclusivity, and the degree of regulatory control. Given assumptions concerning the degree of competition for rail franchises and bidding behaviour, some predictions are made about the likely magnitude of winning bids and these predictions are validated against actual bids.

Suggested Citation

  • John Preston & Gerard Whelan & Chris Nash & Mark Wardman, 2000. "The Franchising of Passenger Rail Services in Britain," International Review of Applied Economics, Taylor & Francis Journals, vol. 14(1), pages 99-112.
    • Handle: RePEc:taf:irapec:v:14:y:2000:i:1:p:99-112
    DOI: 10.1080/026921700101506
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    References listed on IDEAS

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    Cited by:

    1. Carmen A. Li & John Stittle, 2014. "Privatisation and Franchising of British Train Operations," Australian Accounting Review, CPA Australia, vol. 24(1), pages 53-65, March.
    2. Gorman, Michael F., 2008. "Evaluating the public investment mix in US freight transportation infrastructure," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(1), pages 1-14, January.
    3. Yvrande-Billon, Anne & Menard, Claude, 2005. "Institutional constraints and organizational changes: the case of the British rail reform," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 675-699, April.
    4. Preston, John, 2008. "A review of passenger rail franchising in Britain: 1996/1997-2006/2007," Research in Transportation Economics, Elsevier, vol. 22(1), pages 71-77, January.
    5. Men-Andri Benz & Stefan Buehler & Armin Schmutzler, 2000. "Quality Provision in Deregulated Industries: The Railtrack Problem," SOI - Working Papers 0002, Socioeconomic Institute - University of Zurich.
    6. Preston, John, 2016. "Deja Vu all over again? Rail franchising in Britain," Research in Transportation Economics, Elsevier, vol. 59(C), pages 107-115.
    7. Hensher, David A. & Ho, Chinh & Knowles, Louise, 2016. "Efficient contracting and incentive agreements between regulators and bus operators: The influence of risk preferences of contracting agents on contract choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 87(C), pages 22-40.

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