Title: PRICING AND INVESTMENT IN RAILWAY FREIGHT SERVICES. IN: RAILWAYS
Abstract: The British Railways Board must observe the general financial criteria laid down by the British government for public corporations: (1) prices should reflect long-run marginal costs, unless there is persistent unused capacity and (2) short-run marginal cost may be used as a basis of pricing to enhance the use of pre-existing resources. This paper discusses how these rules affect British Rail and their implications for short- and long-run pricing and investment decision making. The author shows that for a railway facing severe competition from road haulage, it is logical to see what revenue the traffic can bring, and to use that to determine the extent to which assets should be replaced as opposed to having services run down over time.
Publication Year: 2002
Publication Date: 2002-01-01
Language: en
Type: article
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