On the basis of EU-Directive 2012/34/EU and corresponding national legislation, rail infrastructure companies in Europe levy a charge on the rail operators for the use of the infrastructure. In this way, the rail operators pay for the direct costs. On top of this, member states also have the possibility to levy a markup, which according to the Directive should be based on „what the market can bear“.
A method which can be applied to determine what the market can bear is the Ramsey-Boiteux-Principle). This principle implies that the mark-up for a market segment should be inversely proportional to the own price elasticity for this market segment: segments with a large sensitivity to a price change pay a smaller mark-up and segments that are more insensitive pay a higher markup.
Several member states in Europe are applying the market-can-bear principle for levying markups on rail transport providers, or are planning to do so in the near future. In order to calculate the Ramsey-Boiteux markup, it is important for rail infrastructure companies to determine price elasticities of demand for rail transport by market segment. Demand here refers to the demand by final consumers of rail transport services: travellers in passenger transport and shippers and logistics service providers in freight transport. The rail operator is the link between the rail infrastructure company and the final consumer, and often the assumption is made that the extra charges will be passed on by the rail operator to the final consumer.
Price elasticities of demand for rail transport by these agents can be determined using three different methods:
Base the elasticities for a certain study area on a review of the literature on elasticities in freight and/or passenger transport. Here it is important to select those studies that are most transferable to the study area and the market segments studied.