Limits to the (De-)Regulation of Transport Services

In section 1 the disaggregated approach of network economics is explained which distinguishes between the network levels transport services, traffic control systems and fixed infrastructure. Section 2 starts with an explanation of the theory of monopolistic bottlenecks, which can be used as a basis for distinguishing between parts of a network where competition functions efficiently and those that enjoy stable, network-specific market power. Section 3 explores the opportunities for potential and active competition on the markets for transport services, while Section 4 explains the potential for auction competition in respect of air traffic and train control systems. Section 5 is devoted to regulation in connection with access to transport infrastructure, including the relationship between disaggregated regulation of bottlenecks and the essential facilities theory, and the development of an appropriate approach towards regulation of access charges. Lastly, the paper looks at the ongoing reform of access to European airports (Section 6) and rail networks (Section 7).