Entry and competition in freight transport: the case of a prospective transalpine rail link between France and Italy
AbstractWe analyze the expected effects of building a rail tunnel between Lyon and Turin on i) the market shares of the established and the new suppliers, and ii) consumer surplus. The prospective project consists of a 53km rail tunnel providing freight shippers with a new alpine path. We calibrate an equilibrium model where freight shippers choose a mode and alpine path to ship goods from a given origin to a given destination. Freight carriers strategically set prices for the differentiated products they supply. Deriving the market equilibrium, we simulate the entry of a quality-improved product and test its competitive viability. The prospective alpine path proves both competitive and welfare-enhancing on the regional market, loses its competitive edge on the wider North-South market, and leads to a modal shift on the West-East market. We argue that the new infrastructure is only one tool out of a global modal shift-oriented policy toolbox. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 10-010.
Date of creation: 2010
Date of revision:
Transalpine freight; New rail infrastructure; Simulation model; Competition;
Find related papers by JEL classification:
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion
- L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-20 (All new papers)
- NEP-CMP-2010-03-20 (Computational Economics)
- NEP-COM-2010-03-20 (Industrial Competition)
- NEP-URE-2010-03-20 (Urban & Real Estate Economics)
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- Mancuso, Paolo, 2014. "An analysis of the competition that impinges on the Milan–Rome intercity passenger transport link," Transport Policy, Elsevier, vol. 32(C), pages 42-52.
- Cerquera Dussán, Daniel & Ullrich, Hannes, 2010. "Consumer welfare and unobserved heterogeneity in discrete choice models: The value of alpine road tunnels," ZEW Discussion Papers 10-095, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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