European Integration: Is it on track? A study of railway prices.

Abstract: This thesis aims to investigate if there is a monetary cost associated with interstate travel by rail within the European Union and how this differs from intrastate railway travel in the Union. The paper makes use of two economic theories, Transaction cost theory and Ramsey pricing, to help explain the effect we find. A linear regression is applied to our dataset containing 1050 observations and we find a statistically significant cost attributed to interstate travel by rail within the Union. This implies that there are still barriers present limiting the Unions goal towards a single market and the free movement of goods and people. The effect we find can be explained both by differences in price elasticity of demand between consumers and the presence of different transaction costs limiting integration.