The Efficiency of the Victorian British Railway Network: A Counterfactual Analysis

This study of the evolution of the British railway network, 1825-1914, investigates claims that the network was over-capitalised due to excessive duplication of lines. A counterfactual network is constructed to represent the most efficient alternative network that could have been constructed given what was known at the time. Comparison of the actual and counterfactual networks suggests that the actual network was even more inefficient than is commonly alleged. The roots of this inefficiency can be traced to excessive competition between towns which national government was too weak to control. Although Parliament was in a position to regulate excessive competition between the private railway companies that built the system, competition between towns discouraged Parliament for regulating inter-company competition to an adequate degree.