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Competition in Swedish passenger railway : entry in an open-access market

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Abstract

The Swedish market for passenger railway services has been open to competition since the year 2010. Although minor entries have been made since this date, the incumbent SJ only faced substantial competition when MTR Express entered the Stockholm-Gothenburg line in March 2015. Using unique Sweden ticket price data from operators' websites, this paper investigates what effects this entry has had on market prices. The results show that the incumbent's prices decreased by 12.8 percent on average between March 2015 and June 2016. The price level of the competitor is well below the average price that was offered on the railway market in the pre-entry period. Further, the largest price reduction, in percentage terms, was found on tickets booked 10 days before the departure date. Finally, the decrease in the average price of the incumbent seems to be an ongoing process, and a further drop in price would not be unexpected.

Suggested Citation

  • Vigren, Andreas, 2016. "Competition in Swedish passenger railway : entry in an open-access market," Working papers in Transport Economics 2016:18, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
  • Handle: RePEc:hhs:ctswps:2016_018
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    File URL: http://www.transportportal.se/swopec/CTS2016-18.pdf
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    Keywords

    Railway; Entry; Open access; Competition; Prices; Web crawler;

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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