Railway reforms: Do they influence operating efficiency?

This paper considers railway operations in 23 European countries during 1995-2001, where a series of reform initiatives were launched by the European Commission, and analyses whether these reform initiatives improved the operating efficiency of the railways. Efficiency is measured using Multi-directional Efficiency Analysis, which enables investigation of how railway reforms affect the inefficiencies of specific cost drivers. The main findings are that the reform initiatives generally improve operating efficiency but potentially differently for different cost drivers. Specifically, the paper provides clear empirical evidence that accounting separation is important for improving operating efficiency for both material and staff costs, whereas other reforms only influenced one of these factors.