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Competitive Tendering of Railway Services in Sweden
Extent and Effects 1989-1999
Gunnar Alexandersson & Staffan Hultén*
Stockholm School of Economics
Abstract
In 1988 the vertical separation of the Swedish State Railways into one train operator (SJ) and one
infrastructure holder (Banverket) was implemented. Together with the transfer of responsibility for
the regional non-profitable passenger railway services to regional transport authorities, this reform
paved the way for the introduction of competitive tendering for these services. Initially, only one new
firm entered, but through subsequent tenders this figure has increased to four. Since 1992 it has also
been possible for the state’s negotiator to procure the non-profitable interregional services by means
of tendering. For several years no actual entry occurred on this part of the market, partly due to more
demanding conditions compared to other tenders. However, following the outcome of the latest
tenders, new entry is set to take place in January 2000. Consequently, what started as a very slow
walk towards more competition in the railway sector has taken us to a point where SJ is facing actual
competition on almost all parts of the market. In addition to discussing the new entrants, the different
types of tenders are compared in some detail in the paper. Some empirical data on the number of
bidders, cost reductions, innovations and travelling changes related to tenders is presented and
interpreted. The development of the behaviour of SJ and its competitors is also discussed, as well as
the further impact upon transport policy.
Introduction
In several countries today, not the least in Europe, a process of reforms in the railway sector has been
initiated, aiming at breaking up the national railway companies’ exclusive right of access to the tracks.
In Great Britain, a radical policy has lead to a privatisation of the whole railway sector and a division
of its functions and business areas into a large number