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Price versus Commitment: Managing the Demand for Off-peak Train Tickets in a Field Experiment

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  • Hintermann, Beat

    (University of Basel)

  • Thommen, Christoph

Abstract

Using data from a field experiment, we provide estimates for the own-price elasticity of train travel in Switzerland. Our estimates are based on exogenous changes to the level of discounts for long-distance trains and thus avoid the usual endogeneity problem between demand-dependent discounts. Besides the price, we also vary the length of the pre-sale period during the experiment, which allows us to recover the relative effectiveness of pricing and timing measures. We compute own-price elasticities of around -0.7. Extending the pre-sale deadline by one hour leads to an increase in the pre-sale of discount tickets by 2.1%, which is equivalent to a price decrease by 3.1%. Reducing the price by 10% causes customers to purchase the discount ticket 7 hours earlier. Our results help design measures for peak-shifting in transport at least societal cost.

Suggested Citation

  • Hintermann, Beat & Thommen, Christoph, 2022. "Price versus Commitment: Managing the Demand for Off-peak Train Tickets in a Field Experiment," Working papers 2022/05, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2022/05
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    More about this item

    Keywords

    Field Experiments; Public Transport Systems; Train; Dynamic Pricing; Switzerland;
    All these keywords.

    JEL classification:

    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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