Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/92783 
Year of Publication: 
2011
Series/Report no.: 
ISER Discussion Paper No. 820
Publisher: 
Osaka University, Institute of Social and Economic Research (ISER), Osaka
Abstract: 
We provide a theoretical framework to discuss the relation between market size and vertical structure in the railway industry. The framework is based on a simple downstream monopoly model with two input suppliers, labor forces and the rail infrastructure firm. The operation of the downstream firm (i.e., the train operating firm) generates costs on the rail infrastructure firm. We show that the downstream firm with a larger market size is more likely to integrate with the rail infrastructure firm. This is consistent with the phenomenon in the railway industry.
Subjects: 
vertical integration
railway industry
market size
vertical coordination
JEL: 
L22
L13
R32
Document Type: 
Working Paper

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