Horizontal versus Vertical Separation in Railway Networks: Implications for Network Quality
This paper analyzes the relationship between network quality and organizational structure in railway systems. We consider two options: vertical separation and horizontal separation. We derive the Nash equilibrium network qualities in a two-stage game. In general, the comparison
of network quality between the two organizational structures is ambiguous. However, unless the regulated access fee under vertical separation is sufficiently large, horizontal separation is likely to dominate vertical separation. This is reinforced if horizontal separation enables service complementarities
Besanko, David and Shana Cui. 2016. Horizontal versus Vertical Separation in Railway Networks: Implications for Network Quality. Economics Letters. 138: 78-80.