IDEAS home Printed from https://ideas.repec.org/a/eee/trapol/v95y2020icp1-9.html
   My bibliography  Save this article

Are conventional train passengers underserved after entry of high-speed rail?-Evidence from Chinese intercity markets

Author

Listed:
  • Li, Hongchang
  • Wang, Kun
  • Yu, Kemei
  • Zhang, Anming

Abstract

Despite rich literature on high-speed rail (HSR) and air transport interactions, the HSR's impact on the conventional (low-speed) rail service surprisingly has yet well studied. This paper fills in this research gap by providing empirical evidence in the Chinese intercity travel markets, where large-scale HSR expansion has been conducted since 2008. A nested logit utility model is developed to model passengers' travel mode choice between HSR and conventional train. A difference-in-differences (DID) method is then applied to measure HSR's impact on conventional train service frequency, price, and travel time. This paper then calculates and compares the welfare changes before and after the HSR entry for both the conventional and non-conventional rail passengers. It is found that entry of HSR has significantly reduced frequency of conventional train service, but not its travel time and ticket price. Such an adverse effect is more prominent on the shorter haul routes, probably as a result of the government's intervention to divert rail passengers to emerging HSR service. The calculated welfare loss to the conventional train passengers based on its current market size is approximately 3.41 billion RMB (487 million USD) as of 2017, a figure we consider on the side of conservative estimates. This loss accounts for 8% of the welfare gain brought by HSR to those non-conventional rail passengers. A special caution is, therefore, warranted when evaluating the benefit of the HSR development, as the welfare damage to the conventional train service and its passengers cannot be neglected.

Suggested Citation

  • Li, Hongchang & Wang, Kun & Yu, Kemei & Zhang, Anming, 2020. "Are conventional train passengers underserved after entry of high-speed rail?-Evidence from Chinese intercity markets," Transport Policy, Elsevier, vol. 95(C), pages 1-9.
    • Handle: RePEc:eee:trapol:v:95:y:2020:i:c:p:1-9
    DOI: 10.1016/j.tranpol.2020.05.017
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0967070X20303929
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tranpol.2020.05.017?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wan, Yulai & Ha, Hun-Koo & Yoshida, Yuichiro & Zhang, Anming, 2016. "Airlines’ reaction to high-speed rail entries: Empirical study of the Northeast Asian market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 532-557.
    2. Wang, Kun & Xia, Wenyi & Zhang, Anming, 2017. "Should China further expand its high-speed rail network? Consider the low-cost carrier factor," Transportation Research Part A: Policy and Practice, Elsevier, vol. 100(C), pages 105-120.
    3. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-130, January.
    4. Zhang, Anming & Wan, Yulai & Yang, Hangjun, 2019. "Impacts of high-speed rail on airlines, airports and regional economies: A survey of recent research," Transport Policy, Elsevier, vol. 81(C), pages 1-19.
    5. Jiao, Jingjuan & Wang, Jiaoe & Jin, Fengjun, 2017. "Impacts of high-speed rail lines on the city network in China," Journal of Transport Geography, Elsevier, vol. 60(C), pages 257-266.
    6. Chen, Zhenhua & Haynes, Kingsley E., 2015. "Impact of high speed rail on housing values: an observation from the Beijing–Shanghai line," Journal of Transport Geography, Elsevier, vol. 43(C), pages 91-100.
    7. Wang, Kun & Zhang, Anming & Zhang, Yahua, 2018. "Key determinants of airline pricing and air travel demand in China and India: Policy, ownership, and LCC competition," Transport Policy, Elsevier, vol. 63(C), pages 80-89.
    8. Steven Berry & Panle Jia, 2010. "Tracing the Woes: An Empirical Analysis of the Airline Industry," American Economic Journal: Microeconomics, American Economic Association, vol. 2(3), pages 1-43, August.
    9. Zhenhua Chen & Kingsley E. Haynes, 2015. "Impact of high-speed rail on international tourism demand in China," Applied Economics Letters, Taylor & Francis Journals, vol. 22(1), pages 57-60, January.
    10. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    11. Wang, Kun & Gong, Qiang & Fu, Xiaowen & Fan, Xingli, 2014. "Frequency and aircraft size dynamics in a concentrated growth market: The case of the Chinese domestic market," Journal of Air Transport Management, Elsevier, vol. 36(C), pages 50-58.
    12. Doi, Naoshi & Ohashi, Hiroshi, 2019. "Market structure and product quality: A study of the 2002 Japanese airline merger," International Journal of Industrial Organization, Elsevier, vol. 62(C), pages 158-193.
    13. Chaug-Ing Hsu & Wen-Ming Chung, 1997. "A model for market share distribution between high-speed and conventional rail services in a transportation corridor," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 31(2), pages 121-153.
    14. Zhang, Fangni & Graham, Daniel J. & Wong, Mark Siu Chun, 2018. "Quantifying the substitutability and complementarity between high-speed rail and air transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 191-215.
    15. Fu, Xiaowen & Lei, Zheng & Wang, Kun & Yan, Jia, 2015. "Low cost carrier competition and route entry in an emerging but regulated aviation market – The case of China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 3-16.
    16. Wenyi Xia & Kun Wang & Anming Zhang, 2018. "Air Transport and High-speed Rail Interactions in China: Review on Impacts of Low-cost Carriers, Rail Speed, and Modal Integration," Advances in Airline Economics, in: Airline Economics in Asia, volume 7, pages 103-122, Emerald Group Publishing Limited.
    17. Choi, Jong Hae & Wang, Kun & Xia, Wenyi & Zhang, Anming, 2019. "Determining factors of air passengers’ transfer airport choice in the Southeast Asia – North America market: Managerial and policy implications," Transportation Research Part A: Policy and Practice, Elsevier, vol. 124(C), pages 203-216.
    18. Xiaowen Fu & Tae H. Oum & Jia Yan, 2014. "An Analysis of Travel Demand in Japan's Intercity Market Empirical Estimation and Policy Simulation," Journal of Transport Economics and Policy, University of Bath, vol. 48(1), pages 97-113, January.
    19. Xia, Wenyi & Zhang, Anming, 2016. "High-speed rail and air transport competition and cooperation: A vertical differentiation approach," Transportation Research Part B: Methodological, Elsevier, vol. 94(C), pages 456-481.
    20. Zhang, Anming & Hanaoka, Shinya & Inamura, Hajime & Ishikura, Tomoki, 2008. "Low-cost carriers in Asia: Deregulation, regional liberalization and secondary airports," Research in Transportation Economics, Elsevier, vol. 24(1), pages 36-50.
    21. Vaze, Vikrant & Luo, Tian & Harder, Reed, 2017. "Impacts of airline mergers on passenger welfare," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 130-154.
    22. Yan, Jia & Winston, Clifford, 2014. "Can private airport competition improve runway pricing? The case of San Francisco Bay area airports," Journal of Public Economics, Elsevier, vol. 115(C), pages 146-157.
    23. Chen, Zhenhua, 2017. "Impacts of high-speed rail on domestic air transportation in China," Journal of Transport Geography, Elsevier, vol. 62(C), pages 184-196.
    24. Wu, Jianhong & Nash, Chris & Wang, Dong, 2014. "Is high speed rail an appropriate solution to China’s rail capacity problems?," Journal of Transport Geography, Elsevier, vol. 40(C), pages 100-111.
    25. Wang, Kun & Xia, Wenyi & Zhang, Anming & Zhang, Qiong, 2018. "Effects of train speed on airline demand and price: Theory and empirical evidence from a natural experiment," Transportation Research Part B: Methodological, Elsevier, vol. 114(C), pages 99-130.
    26. Fu, Xiaowen & Zhang, Anming & Lei, Zheng, 2012. "Will China’s airline industry survive the entry of high-speed rail?," Research in Transportation Economics, Elsevier, vol. 35(1), pages 13-25.
    27. Li, Hongchang & Yu, Kemei & Wang, Kun & Zhang, Anming, 2019. "Market power and its determinants in the Chinese railway industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 120(C), pages 261-276.
    28. Liu, Shuli & Wan, Yulai & Ha, Hun-Koo & Yoshida, Yuichiro & Zhang, Anming, 2019. "Impact of high-speed rail network development on airport traffic and traffic distribution: Evidence from China and Japan," Transportation Research Part A: Policy and Practice, Elsevier, vol. 127(C), pages 115-135.
    29. Zhang, Qiong & Yang, Hangjun & Wang, Qiang & Zhang, Anming & Zhang, Yahua, 2020. "Impact of high-speed rail on market concentration and Lerner index in China's airline market," Journal of Air Transport Management, Elsevier, vol. 83(C).
    30. Hangjun Yang & Qiong Zhang & Qiang Wang, 2018. "Airline Deregulation, Market Competition, and Impact of High-speed Rail on Airlines in China," Advances in Airline Economics, in: Airline Economics in Asia, volume 7, pages 79-101, Emerald Group Publishing Limited.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jin, Wenwan & Zhu, Shengjun, 2023. "High-speed rail network and regional convergence/divergence in industrial structure," Socio-Economic Planning Sciences, Elsevier, vol. 87(PA).
    2. Wong, R.C.P. & Szeto, W.Y., 2022. "The effects of peak hour and congested area taxi surcharges on customers’ travel decisions: Empirical evidence and policy implications," Transport Policy, Elsevier, vol. 121(C), pages 78-89.
    3. Huang, Yan & Zong, Huiming, 2022. "The intercity railway connections in China: A comparative analysis of high-speed train and conventional train services," Transport Policy, Elsevier, vol. 120(C), pages 89-103.
    4. Cheng, Junmei & Chen, Zhenhua, 2021. "Impact of high-speed rail on the operational capacity of conventional rail in China," Transport Policy, Elsevier, vol. 110(C), pages 354-367.
    5. Li, Tao & Rong, Lili & Zhang, Anming, 2021. "Assessing regional risk of COVID-19 infection from Wuhan via high-speed rail," Transport Policy, Elsevier, vol. 106(C), pages 226-238.
    6. Yanyan Gao & Yongqing Nan & Shunfeng Song, 2022. "High‐speed rail and city tourism: Evidence from Tencent migration big data on two Chinese golden weeks," Growth and Change, Wiley Blackwell, vol. 53(3), pages 1012-1036, September.
    7. Yuan, Liang & Fan, Xiaoming, 2023. "As a Chinese saying goes, ‘To get rich, first pave the way’: The opening of high-speed rail and automobile consumption in China," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    8. Shi, Kehan & Wang, Jinfang, 2024. "The influence and spatial effects of high-speed railway construction on urban industrial upgrading: Based on an industrial transfer perspective," Socio-Economic Planning Sciences, Elsevier, vol. 93(C).
    9. Gu, Hongyi & Wan, Yulai, 2022. "Airline reactions to high-speed rail entry: Rail quality and market structure," Transportation Research Part A: Policy and Practice, Elsevier, vol. 165(C), pages 511-532.
    10. Hwang, Hyeonjun & Lee, Myoung-jae, 2020. "A simple makeover can increase bus ridership: The story of Tayo bus," Transport Policy, Elsevier, vol. 97(C), pages 103-112.
    11. Pan, Haixiao & Gao, Ya & Shen, Qing & Moudon, Anne Vernez & Tuo, Jianyi & Habib, Khandker Nurul, 2023. "Does high-speed rail mitigate peak vacation car traffic to tourist city? Evidence from China," Transport Policy, Elsevier, vol. 143(C), pages 93-105.
    12. Xie, Jiemin & Zhan, Shuguang & Wong, S.C. & Wen, Keyu & Qiang, Lixia & Lo, S.M., 2022. "High-speed rail services for elderly passengers: Ticket-booking patterns and policy implications," Transport Policy, Elsevier, vol. 125(C), pages 96-106.
    13. Yu, Kemei & Wu, Jianhong & Wang, Kun & Zhang, Anming & Zheng, Shiyuan & Wang, Yixiao & Li, Hongchang, 2023. "Restructuring Chinese railways from a cost-efficient perspective—A hedonic cost function analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 177(C).
    14. Sun, Yunpeng & Razzaq, Asif & Kizys, Renatas & Bao, Qun, 2022. "High-speed rail and urban green productivity: The mediating role of climatic conditions in China," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    15. Yu Jia & Yunqian Wang & Piao Li & Shuang Gao, 2024. "Economic Communication: The Influence of High-Speed Rail on Urban-Rural Income Inequality in China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 174(1), pages 47-73, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yang, Hangjun & Ma, Wenliang & Wang, Qiang & Wang, Kun & Zhang, Yahua, 2020. "Welfare implications for air passengers in China in the era of high-speed rail," Transport Policy, Elsevier, vol. 95(C), pages 1-13.
    2. Zhang, Anming & Wan, Yulai & Yang, Hangjun, 2019. "Impacts of high-speed rail on airlines, airports and regional economies: A survey of recent research," Transport Policy, Elsevier, vol. 81(C), pages 1-19.
    3. Su, Min & Luan, Weixin & Fu, Xiaowen & Yang, Zaili & Zhang, Rui, 2020. "The competition effects of low-cost carriers and high-speed rail on the Chinese aviation market," Transport Policy, Elsevier, vol. 95(C), pages 37-46.
    4. Chen, Yilin & Yang, Hangjun & Wang, Kun & Guo, Lin, 2022. "Intercity network expansion by low-cost carrier or high-speed rail, from the environmental perspective," Journal of Air Transport Management, Elsevier, vol. 104(C).
    5. Yang, Zhiwei & Li, Can & Jiao, Jingjuan & Liu, Wei & Zhang, Fangni, 2020. "On the joint impact of high-speed rail and megalopolis policy on regional economic growth in China," Transport Policy, Elsevier, vol. 99(C), pages 20-30.
    6. Fu, Xiaowen & Lei, Zheng & Liu, Shaoxuan & Wang, Kun & Yan, Jia, 2020. "On-time performance policy in the Chinese aviation market - An innovation or disruption?," Transport Policy, Elsevier, vol. 95(C), pages 14-23.
    7. Asep Yayat Nurhidayat & Hera Widyastuti & Sutikno & Dwi Phalita Upahita, 2023. "Research on Passengers’ Preferences and Impact of High-Speed Rail on Air Transport Demand," Sustainability, MDPI, vol. 15(4), pages 1-26, February.
    8. Wang, Kun & Xia, Wenyi & Zhang, Anming, 2017. "Should China further expand its high-speed rail network? Consider the low-cost carrier factor," Transportation Research Part A: Policy and Practice, Elsevier, vol. 100(C), pages 105-120.
    9. Jiao, Jingjuan & Wang, Jiaoe & Zhang, Fangni & Jin, Fengjun & Liu, Wei, 2020. "Roles of accessibility, connectivity and spatial interdependence in realizing the economic impact of high-speed rail: Evidence from China," Transport Policy, Elsevier, vol. 91(C), pages 1-15.
    10. Gu, Hongyi & Wan, Yulai, 2020. "Can entry of high-speed rail increase air traffic? Price competition, travel time difference and catchment expansion," Transport Policy, Elsevier, vol. 97(C), pages 55-72.
    11. Liu, Shuli & Wan, Yulai & Ha, Hun-Koo & Yoshida, Yuichiro & Zhang, Anming, 2019. "Impact of high-speed rail network development on airport traffic and traffic distribution: Evidence from China and Japan," Transportation Research Part A: Policy and Practice, Elsevier, vol. 127(C), pages 115-135.
    12. Zhang, Qiong & Yang, Hangjun & Wang, Qiang & Zhang, Anming & Zhang, Yahua, 2020. "Impact of high-speed rail on market concentration and Lerner index in China's airline market," Journal of Air Transport Management, Elsevier, vol. 83(C).
    13. Wang, Jiaoe & Huang, Jie & Jing, Yue, 2020. "Competition between high-speed trains and air travel in China: From a spatial to spatiotemporal perspective," Transportation Research Part A: Policy and Practice, Elsevier, vol. 133(C), pages 62-78.
    14. Sun, Xinyu & Yan, Sen & Liu, Tao & Wang, Jiayin, 2023. "The impact of high-speed rail on urban economy: Synergy with urban agglomeration policy," Transport Policy, Elsevier, vol. 130(C), pages 141-154.
    15. Mizutani, Jun & Sakai, Hiroki, 2023. "The effects of frequent flyer programs in the competition with high speed rail: A case study of air passenger preference in Japan," Journal of Air Transport Management, Elsevier, vol. 106(C).
    16. Duan, Liaoliao & Sun, Weizeng & Zheng, Siqi, 2020. "Transportation network and venture capital mobility: An analysis of air travel and high-speed rail in China," Journal of Transport Geography, Elsevier, vol. 88(C).
    17. Wang, Wei & Sun, Huijun & Wu, Jianjun, 2020. "How does the decision of high-speed rail operator affect social welfare? Considering competition between high-speed rail and air transport," Transport Policy, Elsevier, vol. 88(C), pages 1-15.
    18. Strauss, Jack & Li, Hongchang & Cui, Jinli, 2021. "High-speed Rail's impact on airline demand and air carbon emissions in China," Transport Policy, Elsevier, vol. 109(C), pages 85-97.
    19. Wang, Lei, 2018. "High-speed rail services development and regional accessibility restructuring in megaregions: A case of the Yangtze River Delta, China," Transport Policy, Elsevier, vol. 72(C), pages 34-44.
    20. Wang, Yixiao & Sun, Luoyi & Teunter, Ruud H. & Wu, Jianhong & Hua, Guowei, 2020. "Effects of introducing low-cost high-speed rail on air-rail competition: Modelling and numerical analysis for Paris-Marseille," Transport Policy, Elsevier, vol. 99(C), pages 145-162.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:trapol:v:95:y:2020:i:c:p:1-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.