Abstract
Efficiency in a railroad can be influenced from two sources: externally and internally. While it is obvious that a railway’s divisions or business units themselves determine the operational efficiency of the enterprise, one could question the influence of an external regulator and thus the importance of the latter for the analysis of Chinese Railways’ efficiency. However, even railroad sectors that are highly liberalized (like in the UK) still face an external regulatory body, which might be government controlled or at least answerable to the government. If not the government itself, at least such an external regulatory body can exert significant influence on a wide range of business decisions within the railroad, for better or worse. Therefore, it is imperative to consider its role and degree of intervention.
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It is disputed, which market design fundamentally leads to optimal market performance. If governments consider perfect competition the optimal model, the ensuring of well-functioning competition itself can be a goal of governmental economic policy. In a differing view, represented among others by Erhard Kantzenbach, competition is just a means of achieving various objective functions. These objective functions can be of both an economic and a political nature (Kantzenbach 1967).
In the multi-product case economies of scale are neither a necessary nor a sufficient condition for a natural monopoly (Baumol 1977: 817).
Baumol and Willig (1981: 408) define: “An entry barrier is anything that requires an expenditure by a new entrant into an industry, but that imposes no equivalent cost upon an incumbent.”
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© 2008 Physica-Verlag Heidelberg
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(2008). Methodology for Analysis of Chinese Railways. In: Chinese Railways. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2002-7_3
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DOI: https://doi.org/10.1007/978-3-7908-2002-7_3
Publisher Name: Physica-Verlag HD
Print ISBN: 978-3-7908-2001-0
Online ISBN: 978-3-7908-2002-7
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