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Price Competition within and between Airlines and High-Speed Trains: The Case of the Milan—Rome Route

Author

Listed:
  • Graziano Abrate

    (University of Piemonte Orientale ‘A. Avogadro’, Department of Economics and Business, Via Perrone 18, 28100 Novara, Italy)

  • Giampaolo Viglia

    (Faculty of Management, Bournemouth University, Fern Barrow, Talbot Campus, Poole, Dorset BH12 5BB, UK)

  • Javier Sanchez García

    (Department of Business Administration and Marketing, Universitat Jaume I, Av De Vincent Sos Baynat s/n, 12071 Castello' de la Plana, Spain)

  • Santiago Forgas-Coll

    (Faculty of Economics and Business, Universitat de Barcelona, Av Diagonal 690, 08034 Barcelona, Spain)

Abstract

In the travel industry high-speed trains and airlines are increasingly competing for passengers, and the diffusion of price optimization based on real time demand fluctuations poses new challenges in the analysis of price competition between operators. This paper presents an analysis of how different competitors simultaneously adjust their prices in the short run. The empirical model accounts for dynamic price variations, exploring both intramodal and intermodal price competition. The results, based on 12,506 price observations, show that intermodal competition presents some kind of asymmetric behaviour, with airlines reacting more than trains to competitors' price changes. The paper concludes with the implications of this heterogeneous behaviour for the tourism and travel industries.

Suggested Citation

  • Graziano Abrate & Giampaolo Viglia & Javier Sanchez García & Santiago Forgas-Coll, 2016. "Price Competition within and between Airlines and High-Speed Trains: The Case of the Milan—Rome Route," Tourism Economics, , vol. 22(2), pages 311-323, April.
    • Handle: RePEc:sae:toueco:v:22:y:2016:i:2:p:311-323
    DOI: 10.5367/te.2016.0549
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    References listed on IDEAS

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