The first chapter of the book “Rail economics, policy and regulation in Europe”, sets the stage and recalls the fundamentals of rail economics and regulation in the context of de-regulation and re-regulation as promoted by the European Commission. It focuses on the specific role that regulation and regulators play – and are supposed to play – in the shaping of the European railway sector (past) or industry (future). It does so by considering the economic dimensions of railway de-and re-regulation, as opposed to the technical and safety dimensions. This chapter is divided into three distinct sections. The first section presents the European Commission’s (EC) history and programme of railway de-regulation and re-regulation, especially with regard to economic regulation. In the second section, we look at the underlying railway economics from the perspective of the main three types of rail market players that have emerged as a result of the EC’s de-/re-regulation initiatives; namely, infrastructure managers, train operating companies and station managers. The third section discusses the challenges for railway regulation, and European railway regulatory policy more generally, that result from the newly emerging and increasingly fragmented European railway industry structure.