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Service Provision on a Railway Network: An Experiment

Listed author(s):
  • Aurora Garcia-Gallego


    (Laboratorio de Economia Experimental and Economics Department, Universitat Jaume I)

  • Nikolaos Georgantzis


    (Laboratorio de Economia Experimental, Universitat Jaume I and Economics Department, Universidad de Granada)

  • Gerardo Sabater-Grande


    (Laboratorio de Economia Experimental and Economics Department, Universitat Jaume I)

Inspired by the ongoing debate regarding the liberalization of the Spanish railway network, we use real-world information on the features of passenger transportation demand and the existing network infrastructure to build a complex experimental setting. We test the efficiency of alternative service provision obligations imposed to railway companies. Our results show that imposing a minimum service for less profitable connections not only improves consumer and overall welfare but will not harm the companies, because it enhances connectivity and the overall demand on the network. In the absence of such service provision restrictions, the companies failing to recognize the profitability of creating a complete network leave some connections unserved, thus reducing overall demand for passenger services.

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Paper provided by NET Institute in its series Working Papers with number 12-14.

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Length: 45 pages
Date of creation: Sep 2012
Handle: RePEc:net:wpaper:1214
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