Analysis of Capacity Pricing and Allocation Mechanisms in Shared Railway Systems: Lessons for the Northeast Corridor

Abstract

Recently, governments have started promoting the use of shared railway systems as a way to take advantage of the existing capital-intensive railway infrastructure. Until 1988, all major railways both managed the infrastructure and operated the trains. In contrast, in shared railway systems, multiple train operators utilize the same infrastructure. Such systems can achieve high utilization, but also require coordination between the infrastructure manager and the train operators. Such coordination, in turn, requires capacity planning and regulation that determines which trains can access the infrastructure at each time, capacity allocation, and the access price they need to pay, capacity pricing. The need to establish capacity pricing and allocation mechanisms in the railway system is relatively new and the comparative performance of alternative mechanisms to price and allocate capacity is still a matter of study. This paper proposes a framework to analyze the performance of shared railway systems under alternative capacity pricing and allocation mechanisms. The paper focuses on how the introduction of price-based and capacity-based mechanisms affect the train operators’ ability to access the infrastructure capacity in the context of the Northeast Corridor in the US. The results of this paper suggest that there are trade-offs associated with each mechanism and none of them is superior to the other on all dimensions. As a result, Northeast Corridor stakeholders should carefully analyze the implications of alternative pricing and allocation mechanisms before locking the system into one of them.