The impact of deregulation on infrastructure investment decisions: a comparison between Sweden and Norway

Research has shown that there is a link between deregulation and rail performances, and between infrastructure investment levels and rail performances. Still, there is little knowledge of how and to what extent deregulation affects the investment levels and how infrastructure investment projects are prioritised. This paper builds on ongoing comparative research tracking the developments of the rail sectors in Sweden and Norway, and draws on recent experiences from competitive tendering of passenger rail transport in Norway. Earlier research has shown that the deregulated Swedish railway industry has succeeded in winning market shares and in renewing service levels to a greater extent than the Norwegian railway industry. However Norway has generally invested substantially more per track km than Sweden, but the direction of and process for choosing investments seem to differ. It has been demonstrated that substantial investments in improved infrastructure result in increased patronage while less significant upgrades have given much more limited effects. In this paper the authors look at the relationship between deregulation of train operations and prioritisation of infrastructure investments. They investigate how infrastructure investments are financed and organised, and how the decision making processes differ in Norway and Sweden. This is done by looking closer at some major investment projects in the two countries. The overall question is to what extent the regulatory features of, and the actors involved in, train operations affect the prioritising of infrastructure investments. The paper concludes by pointing out possible strategies for improving the effectiveness of infrastructure investments in both a deregulated and more regulated policy environment.