TOWARDS A WELFARE ENHANCING PROCESS TO MANAGE RAILWAY INFRA- STRUCTURE ACCESS 2001-02-15 Jan-Eric Nilsson Centre for Transport Economics (CTEK) Box 760 S-781 27 BORLÄNGE, Sweden Phone +46 243 736 79 Fax +46 243 736 71 E-mail jen@du.se Abstract : The European Commission has suggested that the use of scarce railway track capacity should be charged for on a marginal cost basis and that a welfare enhancing procedure to allocate capacity between competing operators is to be implemented. The present paper presents a practica- ble way to deal with these challenges. Two issues are at the analytical core of the problem. First, in order to prioritise, accurate information is required about the operators' willingness-to-pay for track access; to this end, an auctioning procedure has been developed. Secondly, an approach to handle the technically complex optimisation problem is needed so that ‘reasonably’ optimal allocations, given the ‘accurate’ information, can be established; dual optimisation is suggested as the remedy. Recent experiences from the US auctioning of radio-wave frequencies are cited as supporting evi- dence for the rationale of the approach. 1 1 This work has been funded by the Swedish National Rail Administration, the Swedish Transport and Communi- cations Board and partly also by way of a EU Commission fourth framework grant. My gratitude to Joakim Fredriksson and Gunnar Isacsson for several years of co-operation is great; the usual caveats remain.