1. Auction Pricing of Network Access for North American Railways Steven Harrod University of Dayton ©2012

2. Welcome! Motivation –Shared use of railways, desire for competition –Political transparency –Are auctions an appropriate pricing mechanism? Method –Fixed increment bid auction –Optimal timetables at each round Results –Revenue 15% less than true value –Longer auctions reduce revenue Discussion 2

3. Timetabling A Train Path Train Timings 3

4. Timetabling Track Allocation Conflict Resolution 4

5. Network Conflicts Confuse Pricing 5 AB C D E

6. Pricing Methods Fixed Allocation Marginal Cost Value of Service Yield Management Auction 6

7. Political Goals Eliminate Government Subsidy Eliminate Claimed Inefficiencies Stimulate New Services 7

8. 8 TransparentConfidential Yield Management Fixed Allocation; Marginal Cost Auction; Value of Service Cost Independent Cost Linked

9. 9 Ohio “3C” Path Options

10. First Round Solution Input Data Set Increment Train Bid Train in Solution? Train Bid Unchanged Yes No Gross Change in Input Bids? Yes No End Auction Solve Auction Round Auction Process Börndorfer et al. (2006)

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12. Experimental Study Twenty Replications Randomized –train speeds –revenue forecasts Single Track Saturation Capacity Eight Trains Fourteen Bidders (potential trains) Fixed Bid Increments: 10%, 20%, …, 60% 12

13. 120 mph Overlay, Replication 2 Auction Sequence Last Round First Round

14. Factors in Revenue Generation Infrastructure Constraints Bidding Mechanism 14

15. Results 15

16. Gross Revenue Progression in Auction 16 20% increment logarithmic trend

17. 17 Conclusion Transparency Achieved Auctions Favor User –15.6% less revenue –Value transfer from host to user Unpredictable Final Service Mix Questions?

18. Auction Pricing of Network Access for North American Railways Steven Harrod University of Dayton ©2012