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Analyzing the effect of government subsidy on shippers’ mode switching behavior in the Belt and Road strategic context

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  • Kundu, Tanmoy
  • Sheu, Jiuh-Biing

Abstract

The Chinese government is offering subsidies to promote the recently developed China-Europe rail freight corridor under its Belt and Road Initiative (BRI). Despite significant subsidies, the rail mode (China Railway Express) continues to struggle with low load factor. Accordingly, a competition model (rail vs. maritime) grounded on game-theoretic technique is proposed to analyze the effect of the government subsidy on shippers’ mode switching (from maritime to rail) behavior. Analytical results based on a case of China-Germany rail freight transportation describe shippers’ mode switching patterns in response to a mode subsidy and suggest a subsidy scheme for the government.

Suggested Citation

  • Kundu, Tanmoy & Sheu, Jiuh-Biing, 2019. "Analyzing the effect of government subsidy on shippers’ mode switching behavior in the Belt and Road strategic context," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 129(C), pages 175-202.
    • Handle: RePEc:eee:transe:v:129:y:2019:i:c:p:175-202
    DOI: 10.1016/j.tre.2019.08.007
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