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Old September 2nd, 2014, 12:38 PM   #2001
Surel
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Do you know what profit is? It means that what you produce is worth more than what you consume. if you do this, you do increase total welfare.
Of course, all externalities must be taken in to acount, and PT has (sometimes quite large) positive externalities that do justify in some cases a public subsidy. But the operators themselves should nevertheless still try to make a profit.
I did not say that a public service should be in loss either. Btw, there are not that many PT companies that are "profitable" without taping into the public money. When this taping into the public money happens without competition, the profit is just a word without market meaning anyway.

You should differentiate making profit and working efficiently here. PT should indeed be efficient. Efficiency is what creates welfare, not profit. If you would argue that more profitable PT company means more welfare, you would need to prove that, the additional profit the PT company makes is able to offset for the loss the customers incur. I.e. would you be able to redistribute the additional profit so that all the customers would be the same happy as before the change and there would still be left some profit for the owner? Then, and only then, you created welfare.

In practice. Imagine two hypothetical situations.

NS runs 10 trains in the peak hours and 1 train in the off peak hours. The total costs incurred are 11 euro. NS charges 2 and 1 euro respectively and makes 10 euro profit.

Now, NS wants to increase that profit. NS increases the charge to 3 and 1 euro respectively and changes the number of the trains to 8 and 3 respectively. It makes 16 euros profit now. Did this increase the welfare? Hardly so.

If you take that 6 euro extra profit and distribute it to the customers with the higher charge, you don't have enough to distribute it to all of them. So you will have two trains of frustrated customers in the peak hours, because of the higher charge. You have also customers that now travel off peak and keep that one euro. But just before the moment, they were willing to pay two for traveling in the peak hours. Thus, the peak hour travel has more value to them than the off peak 1 euro savings. They are not happier either.

You see, the real welfare increase comes through efficiency and not through profit increase. If the NS was able to either keep the number of peak trains stable, or reduce the costs in order to have more profit that could be redistributed, than we could perhaps talk about welfare increase. And don't let me start about the externalities .

Changing the profit of one economic subject without changing it's efficiency is only changing the distribution of the welfare in the society, not increasing it.
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Old September 2nd, 2014, 01:30 PM   #2002
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No, making people stay in hotels is in no way a good thing. What you'd want would be people living closer to their jobs, but as long as we can't guarantee that families will be able to find jobs in one place, that isn't something we can really fix.
No, if it is cheaper to stay in a hotel than travel during rush hour this means that it costs less to provide a hotel room than a train seat during rush hour. It is thus efficient to stay in a hotel.

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No. It only means you sold it for more than it cost you to produce it. Just because it made you a profit doesn't mean your customer couldn't get a bigger profit in another manner.
You do know what "sold" means right? It means that someone valued your product more than the price you asked for it. So your product is, to the consumer worth worth at least a certain amount. That fact that the value might be a lot more than what you ask yourself only means that you've given some of the added value away for free.
If the customer can get more value for less somewhere else, then somewhere else he will go.

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In fact, absent regulations, it often makes sense to reduce the welfare of your customers, business partners and employees, usually to increase their dependence on you.
That reducing the welfare of your customer increases profits is something I know no example of. It doesn't make sense.

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This risks going off topic, but it's pretty obvious that I'm seeing a large benefit in the freedom to move acquired by making at least urban and preferably suburban public traffic funded fully from tax money.
The "benefit" is what I referred to with the "positive externality". And I agree that it should be considered. This justifies subsidies, it does not justify making it fully tax payer funded, as this would actually reduce the benefit again (by encouraging inefficient mobility behavior)
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Old September 2nd, 2014, 01:46 PM   #2003
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Originally Posted by Surel View Post
In practice. Imagine two hypothetical situations.

NS runs 10 trains in the peak hours and 1 train in the off peak hours. The total costs incurred are 11 euro. NS charges 2 and 1 euro respectively and makes 10 euro profit.

Now, NS wants to increase that profit. NS increases the charge to 3 and 1 euro respectively and changes the number of the trains to 8 and 3 respectively. It makes 16 euros profit now. Did this increase the welfare? Hardly so.
Why not? Running more trains off peak requires less rolling stock in total. So NS is producing its services consuming less resources. So NS has just become more efficient.
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Old September 2nd, 2014, 02:30 PM   #2004
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Why not? Running more trains off peak requires less rolling stock in total. So NS is producing its services consuming less resources. So NS has just become more efficient.
Good point to the example. The real point is, would the NS save enough to compensate the customers to make them evenly satisfied as before the change?

As about your profit increase x welfare decrease doubts. One of the most obvious examples is e.g. decreasing quality of certain products (e.g. chips) to be able to discriminate and segment the market. Collusion is even more simple example.
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Old September 2nd, 2014, 03:00 PM   #2005
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NS to provide alternative transportation after last train in case of delays/cancellation

As a new concession contract (2015-2015) is going to be signed between the ministries and NS, the rail operation company will be required to arrange, provide and fund alternative transportation to the homes of passengers that are left stranded in case the last viable train trip of the day is broken due do delays, detours or cancellations.

NS has some obligations to do it now, but the system for claims is clumsy, and there are ambiguities, such as in case of weather-related delays or those caused by foreign objects/bodies on tracks. Now, apparently, the process will be much more streamlines, instead of refunding the occasional tax bill after forms are sent, NS will have to actively organize itself alternative transportation for stranded passengers by bus, taxi or other means.
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Old September 2nd, 2014, 04:04 PM   #2006
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Good point to the example. The real point is, would the NS save enough to compensate the customers to make them evenly satisfied as before the change?
This doesn't matter. Every person traveling by train is by his actions demonstrating that the trip is worth to him, at least what he paid for it.

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As about your profit increase x welfare decrease doubts. One of the most obvious examples is e.g. decreasing quality of certain products (e.g. chips) to be able to discriminate and segment the market.
This practice doesn't decrease welfare, it just does allow companies to claim some surplus back. Which then usually goes in to more products.
(There aren't a lot of companies making big profits after all... most of the added value goes to the customers and the employees.)
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Collusion is even more simple example.
Collusion is very hard to maintain, absent government support, as the incentive to break it is very strong. That is why so few examples actually exist.
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Old September 2nd, 2014, 04:23 PM   #2007
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This doesn't matter. Every person traveling by train is by his actions demonstrating that the trip is worth to him, at least what he paid for it.
Are you familiar with the Edgeworth box? The welfare can be analyzed on the the same principle. Any change has to be Pareto efficient in order to not decrease the welfare. The increase in the profits would have to increase the welfare at least as much as to offset the decreased welfare due to the higher ticket price. The simple way how you could analyze this is to say that the increased profit would have to be able to make the customers if distributed to them evenly happy as they were in the old situation.

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Originally Posted by K_ View Post
This practice doesn't decrease welfare, it just does allow companies to claim some surplus back. Which then usually goes in to more products.
(There aren't a lot of companies making big profits after all... most of the added value goes to the customers and the employees.)
It decreases the welfare as it decreases the quality of the already made product at costs. I.e. it is a practice that moves the surplus from the consumer to the producer at the costs of the welfare. The surplus could be captured in some other way btw (e.g. income based pricing).

We can continue this in PM if you want.

Last edited by Surel; September 2nd, 2014 at 04:30 PM.
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Old September 2nd, 2014, 05:00 PM   #2008
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No, if it is cheaper to stay in a hotel than travel during rush hour this means that it costs less to provide a hotel room than a train seat during rush hour. It is thus efficient to stay in a hotel.
The goal for every community is to increase wellbeing of its members. Economic welfare is only part of it. Relationships, freedom, and a feeling of usefulness are equally or even more important. If you want to increase these values, you might need to decrease the economic value of your country. Living apart from family and friends lowers the relationship value dramaticly. To make that worth it, other values have to increase more. I don't think that the pure increase of economic value is worth the decrease of the relationship value. Therefore, this is a bad idea.

If you only value economic values, you can get a South Korean society. Schools and parents only focus on high grates, companies expect people to work long hours and people's psychological state isn't important. Therefore South Korea has the highest suicide rate of the world, because the non-economic values aren't valued high enough by the people in power. I am happy that I live in a country where this isn't the case, and will try to fight everything that goes against it.
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Old September 2nd, 2014, 05:09 PM   #2009
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That reducing the welfare of your customer increases profits is something I know no example of. It doesn't make sense.
I don't feel like playing cat and mouse with the general idea of trickle-down economics, because that's mostly tiresome, but I'll point out there are entire businesses that relied on such decrease to even get started - see, for example, antiperspirants, "intimate smell" solutions, shaving legs and a huge chunk of beauty industry, or diamond trade.
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Old September 2nd, 2014, 05:46 PM   #2010
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This thread is becoming unreadable.

1: This is still "the Netherlands Railway thread", right?
2: Why not use English properly, instead of trying to use all these expensive words. Half of you don't know what they mean anyway, and hardly anyone talks like that in England...
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Old September 2nd, 2014, 09:41 PM   #2011
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It's nice that you can read about British railways in Dutch thread, Belgian railways in the Swiss one... :-)
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Old September 2nd, 2014, 09:49 PM   #2012
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This thread is becoming unreadable.

1: This is still "the Netherlands Railway thread", right?
2: Why not use English properly, instead of trying to use all these expensive words. Half of you don't know what they mean anyway, and hardly anyone talks like that in England...
We are not English and not pretending to be. I bet English people talk similar to this then discussing university level economics.

I was not aware of all terms either, but maybe some day we talk about physics and chemistry so I have an advantage
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Old September 2nd, 2014, 09:53 PM   #2013
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I bet the authors of these posts don't even know what they mean. But because it sounds posh they use them anyway, resulting in sentences written in broken English with all these Cambridge/Oxford terms thrown in...
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Old September 2nd, 2014, 10:50 PM   #2014
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This post from RailUK forums says someone tried to a FIP priv ticket in Amsterdam (cheap or free ticket for rail staff or retired rail staff) but was unable to do so as they claimed they can't do it any more because the tickets are now on eenmalige chipkaarten

http://www.railforums.co.uk/showpost...0&postcount=70
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Old September 3rd, 2014, 01:23 AM   #2015
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A VIRM 6+6 just passed by, in regular service But only the first half was open for passengers.

It would be interesting to know what depots handle these materials.
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Old September 3rd, 2014, 02:30 AM   #2016
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VIRM is maintained at Onnen, but the NedTrain workshops in Maastricht and Leidschendam also do maintenance on some VIRM EMUs.
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Old September 3rd, 2014, 08:51 AM   #2017
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Incredible. In the current concession NS has 2 hours to provide alternative transport in case of major disruptions. For the new concession this is going to be reduced to 1 hour.
Even though that is a good thing, I can't help to note that in the old days, they had contracts with local bus companies to always have some busses and drivers standby. In most cases alternative transport was available within half an hour. But those contracts were deemed to expensive.
Also new in the new concession: get-home-warranty. Currently already common practice, but formalised in the new concession.
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Old September 3rd, 2014, 09:12 AM   #2018
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This post from RailUK forums says someone tried to a FIP priv ticket in Amsterdam (cheap or free ticket for rail staff or retired rail staff) but was unable to do so as they claimed they can't do it any more because the tickets are now on eenmalige chipkaarten
All former (Dutch) rail staff I know have been issued personalised OV chip cards. Also all special tickets were exchanged for single use chip cards (I have travelled on a single use 'meereiskaartje' twice now).
This change however wasn't a smooth operation. Information letters were very unclear and despite the letter stating that they should go to a ticket counter for more information most of the ticket counter staff didn't have a clue.
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Old September 3rd, 2014, 09:31 AM   #2019
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VIRM is maintained at Onnen, but the NedTrain workshops in Maastricht and Leidschendam also do maintenance on some VIRM EMUs.
4th of October is Open Doors at NedTrain Leidschendam, due to 175 Railways in NL.
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Old September 3rd, 2014, 10:02 AM   #2020
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Originally Posted by Road_UK View Post
This thread is becoming unreadable.

1: This is still "the Netherlands Railway thread", right?
2: Why not use English properly, instead of trying to use all these expensive words. Half of you don't know what they mean anyway, and hardly anyone talks like that in England...
Agreed. Maybe splitting the whole OV Chipkaart discussion into a different thread would be the best option here.
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