This paper presents the policy conclusions of the SORT-IT (Strategic Organisation and Regulation of Transport - Inter Urban Travel) project undertaken for DGVII of the European Commission as part of the Fourth Framework. A brief review of the liberalisation policies that have been implemented in transport sectors at both national and European levels in recent years is provided. The appropriateness of intervention at a European level is justified with reference to Tiebout's theory of local public goods. The significance of Goodhart's Law, that economic activity will migrate from more regulated to less regulated sectors, is also illustrated. Empirical evidence is presented to show that further reforms of ownership are justifiable in the air and rail sectors, with some restructuring also desirable in the latter. Evidence is also presented to suggest that, for inter urban transport, competition in the market is efficient in the air, road and water sectors but that competition for the market may be more efficient for rail, partly due to greater linkages with urban transport for this sector. It is concluded that the policy prerogative should be to complete the liberalisation of European transport industries, particularly for rail, road passenger and inland waterways. There may also be a case for the further development of pro-competition authorities particularly in the air sector. It is argued that when a Single European Transport Market is created, attention then should switch to addressing issues of interoperability and interconnection.
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