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Competition and Quality: Evidence from High-Speed Railways and Airlines

Author

Listed:
  • Hanming Fang

    (University of Pennsylvania)

  • Long Wang

    (ShanghaiTech University)

  • Yang Yang

    (The Chinese University of Hong Kong)

Abstract

The entry of High-Speed Railways (HSR) represents a disruptive competition to air-lines, particularly for short- to medium-distance journeys. Utilizing a unique dataset that contains the details of all ?ights departing from Beijing to 113 domestic desti-nations in China since January 2009, we employ a di?erence-in-di?erences approach to examine the e?ects of HSR entry on the quality of service provided by airlines as proxied by their on-time performance, and to identify the channels through which competition leads to quality improvement. We document two main ?ndings. First, the competition from the entry of HSR leads to signi?cant reductions in the mean and variance of travel delays on the a?ected airline routes. Second, the reductions in departure delays–which are controlled mostly by airlines, and the duration of taxi-in time–which are controlled mostly by destination airports, are identi?ed as the main sources of the improvement in the airlines’ on-time performance.

Suggested Citation

  • Hanming Fang & Long Wang & Yang Yang, 2020. "Competition and Quality: Evidence from High-Speed Railways and Airlines," PIER Working Paper Archive 20-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    • Handle: RePEc:pen:papers:20-022
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    2. Marczinek, Max & Maurer, Stephan & Rauch, Ferdinand, 2022. "Trade Persistence and Trader Identity - Evidence from the Demise of the Hanseatic League," CEPR Discussion Papers 16957, C.E.P.R. Discussion Papers.
    3. Lee, Kangoh, 2023. "Airline operational disruptions and loss-reduction investment," Transportation Research Part B: Methodological, Elsevier, vol. 177(C).
    4. Wu, Shuping & Han, Dan, 2022. "Accessibility of high-speed rail (HSR) stations and HSR–air competition: Evidence from China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 166(C), pages 262-284.
    5. Liang, Pinghan & Zou, Wei, 2024. "Flying high in the sky: The airports decentralization reform and regional economic development in China," Journal of Asian Economics, Elsevier, vol. 90(C).
    6. Kang, Meiling & Li, Yucheng & Zhao, Zhongkuang & Song, Min & Yi, Jun, 2023. "Travel costs and inter-city collaborative innovation: Evidence of high-speed railway in China," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 286-302.
    7. Ren, Junqiushi, 2023. "Financial conditions and incumbent quality responses to entry: Evidence from airlines' on-time performance," Journal of Air Transport Management, Elsevier, vol. 107(C).
    8. Jiang, Changmin & Wang, Kun & Wang, Qiang & Yang, Hangjun, 2022. "The Impact of High-Speed Rail Competition on Airline On-Time Performance," Transportation Research Part B: Methodological, Elsevier, vol. 161(C), pages 109-127.
    9. Pomykała, Agata & Engelhardt, Juliusz, 2023. "Concepts of construction of high-speed rail in Poland in context to the European high-speed rail networks," Socio-Economic Planning Sciences, Elsevier, vol. 85(C).

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    More about this item

    Keywords

    Competition; Quality; Transportation; Airlines; High-speed Rail; On-time Performance;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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