2002 Volume 4 Issue 4 Pages 023-032
In recent years, the Ministry of Transport (MOT) has reviewed the framework of regulatory policies for the railway industry, so that the efficient management of railway companies may become consistent with the protection of benefits for passengers. In 1998, the Council for Transport Policy in MOT responded to deliberation No. 16; The guideline for the arrangement of conditions concerning abolition of the regulation of market entry in the transport industries. In this response,the Council argued that the characteristic of natural monopoly has been disappearing in the transport industries because of both the maturity of the market and the intensive competition among the various transport modes, and concluded that it becomes less necessary to regulate the market entry.
However, it is doubtful that the characteristic of natural monopoly are uniformly disappearing by companies or by routes. The railway companies should be respectively regulated according to the market characteristics formed around those companies or routes.
In this paper, we measure the economies of scale of the railway industry by companies and by routes. As a result of measurement, we evaluate the market characteristics surrounding each company quantitatively, and classify companies and routes based on their characteristics, and discuss implications for transport policy.
