ABSTRACT
This chapter presents the historical background of the economic structure of the industry, its pricing and regulation. It discusses the emergence of the current open access debate. The chapter reviews the interaction of revenue adequacy if the regulator opens Access more aggressively. It describes the regulatory dilemma that exists with the intersection of revenue adequacy and open access. Open access requires compensating the incumbent railroad that would be providing reciprocal switching or access to its facilities. Setting that access price too high could make it uneconomic for another railroad to take advantage of the proffered access. To understand how open access could impact revenue adequacy, it is necessary to review the methodologies proposed to set access prices. In the literature, this usually means establishing a regulated price for rail bottlenecks, which occur when one carrier has a monopoly at the origin or termination of a shipment.
