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

Author

Listed:
  • Cherbonnier Frédéric

    (Toulouse School of Economics and Sciences-Po, Toulouse, France)

  • Ivaldi Marc

    () (Toulouse School of Economics, CEPR and CESifo, Toulouse, France)

  • Muller-Vibes Catherine

    (Toulouse Business School, Toulouse, France)

  • Van Der Straeten Karine

    (Toulouse School of Economics, CNRS, and Institute for Advanced Study in Toulouse, Toulouse, France)

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, 2017. "Competition For Versus In the Market of Long-Distance Passenger Rail Services," Review of Network Economics, De Gruyter, vol. 16(2), pages 203-238, June.
  • Handle: RePEc:bpj:rneart:v:16:y:2017:i:2:p:203-238:n:8
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    References listed on IDEAS

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    Cited by:

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    2. 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.

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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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