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The effect of intermodal competition on the pricing behaviour of a railway company: Evidence from the German case

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  • Gremm, Cornelia

Abstract

The market for public intercity railway services still belongs to monopolistic companies in many European countries without considerable intramodal competition. Therefore, intermodal competition is of particular importance for this market. In this paper, we analyse the intermodal competition between intercity buses and railways. In particular, we analyse the price-setting behaviour of the German railway company DB Fernverkehr AG in different competitive situations. Starting from the set of all long-distance connections between the larger German cities with daily train services, the ones with bus services are identified and frequencies are counted. In our analysis, we combine bus and railway data as well as general transport and socioeconomic data. A two-step cluster analysis is used to create homogenous transport markets. Within these clusters, a count data regression analysis is applied in order to analyse the number of special prices offered by DB Fernverkehr AG, as these are the most flexible price instruments of DB. Our results show, among others, that the railway budget prices are lower on routes with intermodal competition compared to monopolistic routes.

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  • Gremm, Cornelia, 2018. "The effect of intermodal competition on the pricing behaviour of a railway company: Evidence from the German case," Research in Transportation Economics, Elsevier, vol. 72(C), pages 49-64.
    • Handle: RePEc:eee:retrec:v:72:y:2018:i:c:p:49-64
    DOI: 10.1016/j.retrec.2018.11.004
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    4. Mohammad Tamannaei & Hamid Zarei & Sajede Aminzadegan, 2021. "A Game-Theoretic Approach to the Freight Transportation Pricing Problem in the Presence of Intermodal Service Providers in a Competitive Market," Networks and Spatial Economics, Springer, vol. 21(1), pages 123-173, March.
    5. Gaggero, Alberto A. & Piazza, Giovanni, 2021. "Multilayer networks and route entry into the airline industry: Evidence from the U.S. domestic market," Research in Transportation Economics, Elsevier, vol. 90(C).
    6. Avenali, Alessandro & Gregori, Martina & Reverberi, Pierfrancesco, 2023. "Intercity bus and rail services: Competition and welfare effects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 172(C).
    7. Gremm, Cornelia & Bälz, David & Corbo, Chris & Mitusch, Kay, 2019. "Intermodal competition between intercity buses and trains: A theoretical model," Working Paper Series in Economics 135, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    8. Comisión Nacional de los Mercados y la Competencia (CNMC), 2023. "Guide. Competition against inflation: How competition and efficient regulation help protect the purchasing power of consumers," Colección Estudios de Mercado G-2022-02_ENG, Comisión Nacional de los Mercados y la Competencia (CNMC).
    9. Jaroslav Mašek & Vladimíra Štefancová & Jaroslav Mazanec & Petra Juránková, 2023. "The Classification of Application Users Supporting and Facilitating Travel Mobility Using Two-Step Cluster Analysis," Mathematics, MDPI, vol. 11(9), pages 1-16, May.

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    More about this item

    Keywords

    Intermodal competition; Intercity railway; Intercity buses; Pricing behaviour; Deregulation;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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