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Pricing strategies: who leads and who follows in the air and rail passenger markets in Italy

Author

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  • Angela S. Bergantino
  • Claudia Capozza
  • Mauro Capurso

Abstract

In this paper, we aim at empirically uncovering the existence of price leadership in the passenger transport market, whose oligopolistic structure facilitates the strategic interaction among companies, with price being one of the principal elements of competition. The strategic interaction is particularly favoured by the fact that prices are easily observable online by all competitors. The analysis focuses on selected Italian city-pair markets that differ from one another with respect to the degree of inter- and intra-modal competition and to the characteristics of the transport services provided. We exploit this heterogeneity to study transport operators’ strategic interactions in different competitive environments. We find evidence of the existence of price leadership, even though results differ across city-pair markets. In particular, it emerges that the incumbent operator, in either the air or the rail sector, always holds the role of leader.

Suggested Citation

  • Angela S. Bergantino & Claudia Capozza & Mauro Capurso, 2018. "Pricing strategies: who leads and who follows in the air and rail passenger markets in Italy," Applied Economics, Taylor & Francis Journals, vol. 50(46), pages 4937-4953, October.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:46:p:4937-4953
    DOI: 10.1080/00036846.2018.1459039
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    Cited by:

    1. Beria, Paolo & Lunkar, Vardhman & Tolentino, Samuel & Pařil, Vilém & Kvasnička, Michal, 2023. "Long-distance rail in Europe: Comparing the forms of head-on competition across Europe," Research in Transportation Economics, Elsevier, vol. 102(C).
    2. Bergantino, Angela Stefania & Madio, Leonardo, 2020. "Intermodal competition and substitution. HSR versus air transport: Understanding the socio-economic determinants of modal choice," Research in Transportation Economics, Elsevier, vol. 79(C).
    3. Jakub Chini & Martin Kvizda & Ondřej Špetík, 2023. "What is the real power of incumbents? Case study on the Czech Republic," Competition and Regulation in Network Industries, , vol. 24(1), pages 24-39, March.
    4. Gaggero, Alberto A. & Luttmann, Alexander, 2025. "How does COVID-19 affect intertemporal price discrimination and price dispersion? Evidence from the airline industry," International Journal of Industrial Organization, Elsevier, vol. 101(C).
    5. Shtele, Evgeniia & Beria, Paolo, 2025. "Using synthetic control method to evaluate the effect of a competitor's entry into high-speed rail market," Research in Transportation Economics, Elsevier, vol. 112(C).
    6. 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.
    7. Ristić, Bojan & Stojadinović, Nikola & Trifunović, Dejan, 2022. "Conditions for effective on-track competition in the European passenger railway market: A yardstick for regulations," Transport Policy, Elsevier, vol. 119(C), pages 1-15.
    8. Beria, Paolo & Tolentino, Samuel & Filippini, Gabriele, 2020. "Are prices reduced from direct competition in high-speed rail? Some unexpected evidences from Italy," MPRA Paper 98841, University Library of Munich, Germany.
    9. Rui Hou & Zibin Cui & You Zhao, 2022. "Pricing leadership decisions of competing firms with consumer learning," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2326-2346, September.

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