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Competition For Versus In the Market of Long-Distance Passenger Rail Services

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  • Cherbonnier, Frédéric
  • Ivaldi, Marc
  • Muller-Vibes, Catherine
  • Van Der Straeten, Karine

Abstract

This paper is aimed at evaluating the net gains and trade-offs at stake in implementing the competition of the rail mode in the long distance passenger market either by means of franchise or by an open access mechanism. We simulate the outcomes of competition in and for the market using a differentiated-products oligopoly model allowing for inter- and intra-modal competition in a long distance passenger market. Specifically we first calibrate the model using data describing high speed lines in France and show that the incumbent railway operator’s strategy does not simply boil down to a short-term profit maximization (e.g., because of existing regulation or limit-pricing strategy). This yields two important results when simulating competition. First, whether it is for or in the market, the opening to competition does not guarantee a decrease in prices in favor of passengers. Second, the effects of opening up to competition for the market are relatively predictable and potentially positive, while those of opening up to competition in the market remain very uncertain.

Suggested Citation

  • Cherbonnier, Frédéric & Ivaldi, Marc & Muller-Vibes, Catherine & Van Der Straeten, Karine, 2018. "Competition For Versus In the Market of Long-Distance Passenger Rail Services," TSE Working Papers 18-901, Toulouse School of Economics (TSE), revised Apr 2018.
    • Handle: RePEc:tse:wpaper:32558
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Cherbonnier, Frédéric & Salant, David & Van Der Straeten, Karine, 2021. "Getting auctions for transportation capacity to roll," TSE Working Papers 21-1254, Toulouse School of Economics (TSE).
    2. Brand, Christina & Sieg, Gernot, 2020. "The impact of delays on the welfare effects of on-track competition: The case of transfer passengers with operator-tied tickets," Research in Transportation Economics, Elsevier, vol. 80(C).
    3. Gutiérrez-Hita, Carlos & de la Cruz, Omar & Ramos-Melero, Rodolfo, 2022. "Infrastructure access charges, service differentiation, and strategic competition in the EU railway passenger market," Transportation Research Part B: Methodological, Elsevier, vol. 164(C), pages 87-104.
    4. Florent Laroche & Ayana Lamatkhanova, 2020. "Effects of open access competition on prices and frequencies on the interurban railway market: evidence from Europe," Working Papers halshs-02930864, HAL.
    5. Ristić, Bojan & Stojadinović, Nikola & Trifunović, Dejan, 2022. "Conditions for effective on-track competition in the European passenger railway market: A yardstick for regulations," Transport Policy, Elsevier, vol. 119(C), pages 1-15.
    6. Patrice Bougette & Axel Gautier & Frédéric Marty, 2021. "Which access to which assets for an effective liberalization of the railway sector?," Competition and Regulation in Network Industries, , vol. 22(2), pages 87-110, June.
    7. Brand, Christina & Sieg, Gernot, 2022. "An integral interval timetable for long-distance passenger rail services: Time to reconsider targeting on-track competition," Economics of Transportation, Elsevier, vol. 32(C).
    8. Beria, Paolo & Lunkar, Vardhman & Tolentino, Samuel & Pařil, Vilém & Kvasnička, Michal, 2023. "Long-distance rail in Europe: Comparing the forms of head-on competition across Europe," Research in Transportation Economics, Elsevier, vol. 102(C).
    9. Florent Laroche & Ayana Lamatkhanova, 2021. "Effects of open access competition on prices and frequencies on the interurban railway market: evidence from Europe," Post-Print halshs-02930864, HAL.
    10. Ristić Bojan & Trifunović Dejan & Herceg Tomislav, 2021. "Capacity Competition in Differentiated Oligopolies: Entry Deterrence with Alternative Objective Functions," South East European Journal of Economics and Business, Sciendo, vol. 16(1), pages 84-92, June.
    11. Alexander Eisenkopf & Andreas Knorr, 2021. "Ein innovativer Regulierungsansatz zur Belebung des Wettbewerbs im Schienenpersonenfernverkehr [An Innovative Regulatory Approach to Stimulate Competition in Long-Distance Passenger Rail Transport]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(6), pages 446-453, June.

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    More about this item

    Keywords

    Intermodal competition; Oligopoly model; Open access;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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