Allocation of Access Rights to Rail Network Infrastructure

Access rights on a transmission network possess high degree of inherent differentiation. On a rail network this is further complicated by the need to meet feasibility constraints in scheduling. Common approaches to access pricing focus on recovery of the networks fixed costs and the prevention of monopoly rents: however when the network is congested, the allocation mechanism must also ration scarce access rights amongst users. This paper examines welfare-optimal allocation of access rights on a congested railway network. It examines two mechanisms; a system of ex ante congestion charges determined by a capacity auction, and priority service based on ex post compensation for congestion. It discusses their applicability to passenger and freight rail: the principal focus is on efficient rationing of scarce capacity