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Intermodal competition on some routes in transportation networks: The case of inter urban buses and railways

  • Bataille, Marc
  • Steinmetz, Alexander
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    This paper analyzes the effect of inter urban buses competing on a few routes against trains within an established railway network. In line with expectations, we show that this can lead to unprofitable train service on these routes. However, within an established railway network with every track being profitable, competition on just some tracks can result in a collapse of the entire network. External effects of individual routes on the railway network are fundamental for the profitability of the network. Hence, weakening these network effects might be crucial. As a result, efficient intermodal competition on some routes might cause the abandoning of other routes that are not facing any competition. This effect has to be taken into account by political actors when liberalization of inter urban bus travel is considered.

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    Paper provided by Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 84.

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    Date of creation: 2013
    Date of revision:
    Handle: RePEc:zbw:dicedp:84
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    8. Andrés Gómez-Lobo, 2007. "Why Competition Does Not Work in Urban Bus Markets: Some New Wheels for Some Old Ideas," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 41(2), pages 283-308, May.
    9. Oz Shy, 1996. "Industrial Organization: Theory and Applications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691795, June.
    10. Economides, Nicholas & Salop, Steven C, 1992. "Competition and Integration among Complements, and Network Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 105-23, March.
    11. Ellis, Christopher J. & Silva, Emilson C. D., 1998. "British Bus Deregulation: Competition and Demand Coordination," Journal of Urban Economics, Elsevier, vol. 43(3), pages 336-361, May.
    12. Matthew T. Clements & Hiroshi Ohashi, 2004. "Indirect Network Effects and the Product Cycle: Video Games in the U.S., 1994-2002," Working Papers 04-01, NET Institute, revised Oct 2004.
    13. Braeutigam, Ronald R, 1979. "Optimal Pricing with Intermodal Competition," American Economic Review, American Economic Association, vol. 69(1), pages 38-49, March.
    14. Pedro Cantos & José Manuel Pastor & Lorenzo Serrano, 2010. "Vertical and Horizontal Separation in the European Railway Sector and its Effects on Productivity," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 44(2), pages 139-160, May.
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