Due to the necessities of scheduling, you can almost never have more than one operator on each bit of rail anyway, so once the decision has been made (typically for a period of several years and typically on the basis of nothing whatsoever but price), there is no competition.
So outsourcing government functions to private companies is more closely analogous to the granting of royal merchant charters than to the operation of supermarkets as far as competition is concerned.
Oh, and competition isn't magic. In fact, it introduces a number of costs that are not present for state-run entities - advertising, lawyers to do tax evasion and profit, to name some obvious wastes of money.
It also introduces redundancy into the system, because to operate two companies you need two entire structures that can perform essentially the same service. Now, redundancy isn't necessarily bad, but it's not magically good either. Having 20 % more staff than you need to cover all your bases on a normal day is A Good Idea. Having two CEOs, however, is just a waste of money. (Of course, having one CEO is very often a waste of money too... but I digress.)
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Wow, very true! Would you write a diary on this, it should become a classic.
once the decision has been made (typically for a period of several years and typically on the basis of nothing whatsoever but price), there is no competition.
That's not necessarily true in railfreight. In practice, for medium to large sized customers over medium distances, private railfreight competition can be very lively -- and chaotic and too risky. In Germany, it is a quite frequent occurence that some event -- extra demand, breakdown of a locomotive -- leads to a whole cascade of companies lending locos from other operators (you read that right: one company borrows another's suplus loco, but the second company then discovers it would still need it and borrows a loco itself from a third company) or passing off a regular transport to another company. Always operating on the edge, bankrupcies happen regularly, which mean quick market re-organisations (remaining operators buy up locos and rush in to take customers).
But, I wonder if lower prices are worth the chaos and unreliability for customers. (Then again customer friedliness and fast response are things most nationalised railways could greatly improve upon...) *Lunatic*, n. One whose delusions are out of fashion.
But this is very inefficient. In an integrated railway, locos can simply go to the nearest maintenance shop. In the open access system, they have to waste many train-kilometres to reach the own or the manufacturer depot. Already the separation of different operations in a to-be-privatised state railway has this effect. *Lunatic*, n. One whose delusions are out of fashion.
