Evaluation of the NMa market scan 'Passenger transport by rail'
On September 14, 2011 the Dutch Competition Authority (NMa) published the market scan ‘Passenger transport by rail’. The Dutch Railways (NS) asked SEO Economic Research to carry out an economic assessment of the NMa market scan in terms of reasoning, research design and methodology.
The market scan draws some positive conclusions regarding the market for passenger rail. The NMa concludes that no supernormal profits are made on the concession for the main rail network and assumes that no supernormal profits are made on the regional concessions. Furthermore, it concludes that the quality of passenger transport in recent years has increased and that most of the innovations in railways were socially efficient. The NMa concludes that further improvements can be made.
The economic evaluation of SEO Economic Research shows that the NMa research was insufficient for such conclusions – both about performance and improvement – to be drawn. The study was carried out sloppy at some points, because sources and data are not comparable or traceable, justifications of assumptions and conclusions are missing and there are some factual inaccuracies. Apart from the fact that the conclusion about the absence of supernormal profits is drawn on the wrong grounds this conclusion also undermines the suggested improvements by the NMa. If there would be no supernormal profits being made, the current concession mechanism would be adequate in monitoring and pricing. This report examines the criticisms in detail.
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