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  "documentTitle": "Rail industry cost and revenue sharing (2011)",
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  "authorName": "L.E.K.",
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  "notes": "VTAC stands for Variable Usage Charge (implied context). NR stands for Network Rail.",
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      "text": "Option 3 appears to be a more attractive way of incentivising NR to accommodate additional traffic as it provides better alignment of incentives and covers a much broader range of circumstances.",
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      "text": "The biggest advantage of increasing VTAC rates as a way of incentivising NR to accommodate additional train services is its simplicity. It is easy to understand and to administrate\nThe ultimate objective of this incentive is to maximise rail industry revenue within the current network capabilities, and to enhance the network where there is a VfM case for doing so\nHigher VTAC charges would be equivalent to train operators giving NR a share of the incremental revenue earned by operating additional services\nHowever, it should be noted that there is no direct link between VTAC and revenue. As a result, NR's effective percentage share of the additional revenue would vary on a case by case basis\n- two services could use the same rolling stock and lead to the same VTAC charge but have very different incremental revenue\n- similarly, two services with the same incremental revenue could have very different VTAC charges\nA VTAC based incentive regime could also lead to a perverse incentive on NR whereby it could favour rolling stock which causes more damage to its infrastructure (that would be the case if the increase in VTAC was achieved through a uniform percentage uplift to the current variable usage charge rates)\nProviding that the higher VTAC rates are appropriately set to avoid perverse incentives then this type of incentive mechanism could be an improvement on the status quo because it would be a step towards aligning incentives with train operators\nHowever, Option 3 appears to be a more attractive way of incentivising NR to accommodate additional traffic as it provides better alignment of incentives and covers a much broader range of circumstances\nFurthermore, there could be legal issues associated with this option. There is an EU requirement that infrastructure managers can only charge a mark-up in markets where the train operator can bear the cost",
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      "text": "ORR/ATOC/Network Rail. Rail industry cost and revenue sharing. 116",
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      "text": "A VTAC based incentive mechanism could be an improvement on the status quo. However, Option 3 appears to be a more attractive way of incentivising NR to accommodate additional traffic",
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      "text": "Option 7: Higher VTAC rates",
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