Oligopoly in the European Rail Transport Sector

Walter Eucken (1891-1950) is one of the leading economist of post WW2 Germany, “father” of the Social Market Economy and leader of the Ordo-Group at the University of Freiburg. He was also at the beginning of its scientifical career transport economist at the University of Iena, at a time of deep globalization of world economies at this end of XIXth century, based on world trade all over the world and immigration towards the United States and Canada. He was then a witness of the expansion of trade and passengers transport just before WW1 and worked on the issues of the building of corporations and cartels in international maritime navigation companies. He focused on the scope and practices of cooperation behaviours (from informational contacts to full merging) between maritime companies in order to limit the impact of competition, to secure rentable connections, to controls transport price, to controls harbours arrivals and departures. For example, he highlighted the role of new communication technology (telegraph !) for exchanging information between the harbours and then preventing awful competition (Eucken, 1914, p. 21). He also showed the distortion of competition based on state intervention in subsidizing companies, especially French sailing companies, which contributes to “set nation again each others” (Eucken, 1914, p. 48).

His analysis is relatively modern : description of the role of “Hinterland connections” (Eucken, 1914, p. 19) and the role of transport network, especially the emerging rail freight transport, and agglomerations effects, the power of scale and scope economies, the new role on intermodality in transport operation especially with the railway transport for interregional and local feeder of the great harbour. He also mentioned the emerging forces of spatial competition between harbours in Europe and the key role of regional connections and specialization.

The modernity of this work is interesting: in the railway transport in Europe, we face today  a strong cooperation – agreement ? - from leader companies (“grand fathers”), for example Deutsche Bahn und SNCF on the high speed connections between France and Germany. In air transportation, we consider interlining and alliance as one the major output of liberalization. It would then be interesting to investigate the transferability, under conditions, of the analysis and the results of Walter Eucken 1914 Ph-D in the framework the beginning of the XX century. On the issue of globalization, economists consider the time period of 1890 – 1914 as one of the most globalized time in today world history, largely among today globalization. On this point, we can first notice a huge difference, as Eucken noticed :  the influence of Europe ; before 1914, the European influence was strong and leading : “der europäische Einfluss dominiert” (Eucken, 1914, p.56) (“The European Influence is dominating”, ). Today, we face more a multilateral economical and political world.