Research On Network Economics Measurement And Organizational Boundary Optimization Of Chinese Railways Based On Cost Functions

In recent ten years,China’s railway has achieved leapfrog development represented by high-speed railway.Does this leapfrog development have an impact on railway network economics?Does the existing railway organization boundary still meet the needs of the rapidly changing network operation characteristics?To answer this question,we need to scientifically measure and systematically analyze whether there is network economics and the factors affecting its network economics in Chinese railways.The closely related policy focus is the restructuring of Chinese railways,which is generally concerned by the competent departments of our government and the transportation economists.The experience and lessons of international railway reforms show that the restructuring of network companies should be based on the understanding of its network economics.Based on this,the economic problem studied in this paper is:what are the characteristics and influencing factors of China’s railway network economics?How to measure them quantitatively?How to guide the organizational boundary optimization of China’s railways according to the measured network economics?The existing studies pay more attention to the measurement of the economics of network of foreign railway companies,and less systematically measure the economics of network of China’s railways,including the economics of scale,density,and scope.When discussing the optimization of the organizational boundary of China’s railways,there is little quantitative analysis from the perspective of the economics of network.In particular,the existing research often only analyze the transaction characteristics or production characteristics,leading to the different restructuring conclusions.This requires us to build a unified theoretical research framework from the perspective of the economics of network and analyze the impact of the economics of network on the organizational boundary optimization of China’s railways.Based on the economic theories related to economies of scale and economies of scope,this paper constructs the trans-logarithmic cost function using the panel data of China’s Regional Railway Administrations（RRAs）for the first time,reflects the impact of many output heterogeneity factors and fixed capital investment factors on cost and network economics,and gives the theoretical method of measuring the railway network economics.Combined with the enterprise boundary theory,this paper deeply discusses the influence mechanism and possible results of the network economics on the organizational boundary optimization.The main research contents and conclusions are as follows:（1）This paper systematically combs the evolution process of railway organization boundary in Britain,the United States and Japan,and reveals the realization degree and reform effect of three representative countries on network economy in the evolution process of railway organization boundary.From the essence of economic phenomenon returning to the evolution of organizational boundary,this paper verifies the importance of network economy in the evolution of organizational boundary of railway transportation industry,and provides enlightenment and reference for the construction of cost function and the optimization of organizational boundary of railway transportation industry in China.（2）The theoretical analysis framework of the measurement of the economics of network and organizational boundary optimization of Chinese railways is established.The basic logic of the theoretical analysis framework is"influencing factors-the measurement of the economics of network-organizational boundary optimization".Firstly,starting from the main factors affecting the measurement of the economics of network,combined with the economic attributes of China’s railways,this paper constructs a cost function of Chinese railways,and distinguishes the measurement methods of the economics of network in different situations;Then,from the perspective of the economics of network,this paper analyzes the optimization path of vertical organization boundary and horizontal organization boundary of railway companies.（3）Based on the panel data of 18 Regional Railway Administrations from 2006 to2017,a trans-logarithmic cost function model that can effectively represent the production technology level of China’s railway companies is constructed.It is found that the total cost function is more in line with the background and current situation of the rapid development of China’s railway companies than the variable cost function.The returns to density and returns to scale at the sample mean are 3.02 and 1.04,respectively,which indicating that China’s railways have the economies of scale and density.Interaction estimation coefficients of passenger traffic kilometers,freight traffic kilometers and route mileage"_#、"_&and_#&are 0.004,0.024 and-0.153respectively,indicating that there are no economies of scope between passenger and freight transport services and between passenger transport services and line network,while freight transport services and line network have vertical integration effect.Further,the passenger traffic kilometers and line network are divided into high-speed rail traffic kilometers and conventional passenger traffic kilometers,conventional line mileage and high-speed rail line mileage.The new estimation results show that the interaction estimation coefficients of the four variables’₍、’₍、’’、₍(（）、₍（’）are-0.009,0.051,0.008,0.087 and 0.009,respectively,indicating that there are economies of scope between high-speed rail transport services and conventional passenger services;Operations and the whole line network（conventional line network and high-speed rail line network）don’t exist economics of scope.（4）According to the multi-output characteristics of railway companies,the indicators of average passenger transport distance,average passenger operation speed,average freight transport distance and the proportion of coal transport in railway freight are added to the traditional output homogeneous cost function.It is found that the average passenger transport distance and average passenger operation speed can effectively measure the differential output of passengers.Given any level of output,the costs of transportation in long-distance and low-speed are lower than that of short-distance and high-speed.Further,by comparing with the results of the traditional output homogeneous cost function,it is found that ignoring the output operation characteristics will produce the biased estimation of the cost structure,resulting in the overestimation of returns to scale and returns to density.Under the variable cost function,the estimation errors of increasing economies to scale and returns to density are 5%and 11%.（5）According to the estimated trans-logarithm cost function,the average cost function is calculated,and assuming that other variables remain unchanged at the sample mean,the curve relationship between traffic density and average cost is drawn.The results show that the average cost function of China’s railway companies presents"L"shape.This shows that China’s railway companies generally have the minimum effective density.Under the variable cost function model,the minimum effective passenger traffic density is 25 million person-km/km,and the minimum effective freight traffic density is 40million ton-km/km.Under the total cost function model,the minimum effective passenger traffic density is 35 million person-km/km,and the minimum effective freight traffic density is 65 million ton-km/km.After considering the fixed capital cost,the optimal passenger and freight transportation density is increased by 40%and 62.5%respectively.This means that the existing railway companies need to further improve the traffic density to minimize the total cost.（6）Based on the above research results,the basic direction of organizational boundary reconstructing of China’s railways is the mixed mode of"vertical separation+regional companies".Further,in the case that the specific distribution of China’s railway passenger and freight transport demand among the administrative boundaries of the RRAs cannot be obtained in the short term,it is suggested that the proportion of the transportation volume within the administration should be greater than 70%according to the successful experience of the Japanese railway and the American Railway,based on the principle that it is conducive to improving the competitiveness of the railway in the medium and long-distance transportation market,it is better to expand the transportation scale of the RRAs so as to maximize the transportation density of the railway network:establish a corresponding number of regional freight railway companies with"vertical integration";According to the demand of passenger transport market and the competition of other transport modes,2-3 national long-distance passenger transport companies and provincial regional and local passenger transport companies are established with the province as the boundary,both of which can operate high-speed rail and ordinary rail transport business at the same time;Establish a national high-speed railway network company,fairly open access rights to national long-distance passenger transport companies and provincial passenger transport companies,and actively create conditions to attract new operators to carry out high-speed railway freight business.The main innovations of this paper are as follows:（1）this paper systematically constructs the trans-logarithm cost function model of China’s railway companies,makes a detailed and comprehensive calculation of the network economics,and also expands the empirical research field of cost function;（2）This paper verifies the relationship between railway output hedonic characteristics and the cost structure of China’s railway companies,and makes up for the limits of the existing cost function research;（3）from the perspective of trans-logarithm cost function,the network economics are connected with the organizational boundary of railway companies,which provides a new idea for the analysis of the organizational boundary optimization of railway companies;（4）Based on the above research,this paper provides new schemes and supporting measures for the organizational boundary reconstructing of Chinese railways,which is helpful to speed up the process of reform.