Rail Infrastructure Management Policy: Applying a Real-Options Methodology  

Oleh:

Law, Stephen M. ; MacKay, Alexandra E. ; Nolan, James F.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Public Works Management & Policy vol. 9 no. 2 (Okt. 2004), page 145-153.
Topik: transportation policy; rail line abandonment; access pricing; real options
Fulltext: 145PWM92.pdf (78.27KB)

Isi artikel

Since the economic liberalization of the rail industry in North America, the industry has sought continually to increase operating efficiency. The selective abandonment of track in a rail network is one of the methods most commonly used to reduce rail costs. The issue of rail-line abandonment has proven to be more controversial in Canada than in the United States. At present, the Canadian rail regulator uses costbenefit analysis (CBA) as a decision criterion to assess abandonment proposals. By considering more modern methods of financial analysis, this article constructs a counterfactual examination of an interesting 1993 track abandonment case in Canada. The case is reassessed through the lens of a real-option analytic framework. It is our contention that the information incorporated when using real options for a rail-line abandonment decision removes much of the controversy that has surrounded the process in the past.

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