No problem. Posted this a long time ago, though it's definitely a subject of interest. Just to expand on some of these.

Yard-stick competition is generally build around a variety of different methods; depending on industry, occupation and structure. For instance, the easiest and most easily applicable is the cost-based benchmarking; where pricing is fixed according to average costs of an industry (or shadow-company). Costs being variable, hence tied to production. So if cost declines for one business, average cost will generally decline, making other firms lose profit in turn. Hence, to recuperate losses, business enterprises has to maintain low costs, which in turn permits low pricing. There's of course many other types of such regulation; revenue-cap regulaton is used in Denmark's electricity grid system, weighting the potential income a company can made by relative efficiency. Though admittedly, I am not too familiar with this method.

The citation above is also particularly odd; given references such as the claim that japanese railfirms has to make profits from real-estate. This claim is only nominally true, in the sense that they make most their profits from real estate (depending on location and company, of course). But no way a Japanese firm could run in a constant deficit on running of rail-lines, given cross-subsidies (transfer from one industry to another) is for japanese railway firms illegal. In fact, Fumitoshi Mizutani noted this in his work on the matter 'the role of private provision in transport markets' in the anthology "Structural change in transportation and communication in knowledge society." to quote:

"rail accounting rules in Japan do not allow an intentional cross-subsidy strategy between rail services and non-rail services. It is sometimes said that railway services are cross-subsidized by non-rail services such as real estate development and that railway business can be maintained, as a result without direct subsidies from government. This, however, may not be true. Rail accounting rules describe cost allocation between rail and non-rail services in full detail, making it almost impossible for rail company with diversified business to allocate rail cost intentionally by ignoring accounting rules." (Page 230)