A number of state railways over the world have experienced railway reform, and vertical separation has been frequently utilized during its process. This thesis investigated a variety of models of vertical separation, which the railway sector has experienced over the twenty years.
The main aims of the research are clarifying the key issues on vertical separation: aims of the reform; forms and implementation; advantages; disadvantageous effects.
Based on the examination into the selected cases, this study comparatively analyzed them in terms of: 1) separation of operational factors; and 2) separation of
financial responsibilities. The study also tried to examine an appropriate form of railways depending on the market structure.
There are a number of different forms of vertical separation, and the study clarified the characteristics of each type of it. It also disclosed that whether it intends to introduce within-rail competition or not largely outlines the form of railways. In case it is intended to introduce within-rail competition promoting new entry into the market, it leads to separate operational (at least slot-allocation) and financial responsibilities between infrastructure and operation, whereas without an intention to introduce it, coordination problems through vertical separation are endeavoured to be lessened through certain measures such as integrated operation, share-holding relationship, and confining the separation into the smaller market.
The study showed that vertical separation has a number of advantages, and that the unique exclusive advantage of complete separation, such as the case in UK and Sweden, is introducing within-rail competition fostering neutrality even between the passenger and the freight. It also revealed that this form raises coordination problems even in the prime market especially on condition infrastructure capacity is limited. The result of the study leads to the conclusion that full costs and benefits should be considered upon introducing a form of vertical separation, and that the appropriate form of it depends on the circumstances as well as its objectives.