Regulatory Capture in Railways Industry: A Short Survey

Abstract

This paper shortly surveys theoretical and empirical literature related to regulatory capture in railway industry. In the first section, the survey summarizes the main contributions to the general theoretical framework referred to as the theory of regulation or the regulatory capture theory. Since the low elasticity of demand for railways increases the profits from regulatory capture, the railway industry is a good example of the summarized theoretical argument. To further analyze this example, the second section presents a short survey of regulatory capture in the railway industry.