Developing quality contracts for the Norwegian State Railways' intercity market

The objective of this project has been to develop an alternative subsidy regime that provides incentives for the Norwegian State Railways (NSB) to develop optimal service levels. The problem is defined by the facts that NSB is a profit maximising company, and that the demand side is characterised by external effects and considerable input, mainly in terms of time and money, by the passengers themselves.The project has developed an existing simulation model in order to recommend subsidy arrangements and other conditions that incentivise market efficient solutions. The report recommends specific subsidy levels per passenger, per train-kilometre and for delivered capacity. In addition a bonus/malus system based on punctuality is recommended. Threshold levels for passenger satisfation, beyond which the contract should be renegotiated, should be set as a framework condition for the contract regime.