Abstract
In 1988 the Swedish nationalised railway company was separated into the State Railways, in charge of running rail transport, and the National Rail Administration, responsible for investment in and maintenance of rail infrastructure. The separation made it obvious that the long discussion of optimal road pricing schemes is also relevant for rail traffic. This paper analyses optimal pricing of rail infrastructure use, and optimality conditions for rail and road investment. It is demonstrated that under most circumstances rail charges should be below marginal costs and that investments in both modes should be reduced. (Author/publisher).