The Transnationalization of Railways in the Czech Republic: an institutional travel from formal to informal oligopoly?

This paper focuses on the unobviousness of railway liberalization in the Czech Republic. In its obvious form, the liberalization process, once set into motion, would assume a path-dependent trajectory and result in a liberalized railway market. The liberalization of Czech railway has however resulted in what this paper calls a compensatory monopoly. Compensatory monopoly depicts an informal practice which has allowed the Czech state to compensate the České dráhy (Czech Railways) with a de facto monopoly, while depriving the public rail operator of a de iure monopoly. As the paper claims, the railway liberalization has been a product of the transnationalization of Czech state through its absorption into the global economy and European Union above all. As an accession candidate and later member state of the European Union, the Czech state was obliged to internalize the railway acquis communautaire produced by the European Commission which has consequently transnationalized the Czech national railway. Due to its transnationalizing and simultaneously marketizing character, the railway acquis has also completely restructured the formal institutional setting of the Czech railway, including the social purpose of České dráhy which is no longer to serve the public interest, but rather abide by the market-based logic of business interest. Nonetheless, the acquis internalization has not remained uncontested. On the contrary, the old institutional setting has been further represented by the informal network of České dráhy-state nexus which attempted to reshape the liberalization in a way that would provide České dráhy with a patient capital and enough time to prepare for the competition on the liberalized railway market. The effect of informal practices embodied in the compensatory monopoly has thus proven the railway liberalization in the Czech Republic to be an institutional change with uneven, open-ended and seemingly contradictory outcomes.