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RESEARCH PRODUCT

Pricing and infrastructure fees in shaping cooperation in a model of high-speed rail and airline competition

Rafael Moner-colonquesJosé J. Sempere-monerrisPedro Cantos-sánchezÓScar ÁLvarez-sanjaime

subject

International market050210 logistics & transportationmedia_common.quotation_subject05 social sciencesTransportation010501 environmental sciencesManagement Science and Operations Research01 natural sciences0502 economics and businessBusinessRail infrastructureWelfareDuopolyIndustrial organization0105 earth and related environmental sciencesCivil and Structural Engineeringmedia_common

description

Abstract This paper studies the effects of cooperation in a hub-and-spoke network with high-speed rail and airline competition. The distinctive elements of our analysis are the consideration of: (i) per-passenger airport and rail infrastructure fees; (ii) mixed bundling pricing by partners, and (iii) an airline duopoly in the international market. We show that partners fix the cheapest bundle price of the combined trip, that non-allied operators respond by decreasing the prices per link, and that connecting traffic increases. Per-passenger fees significantly affect the price differences following cooperation. An empirical application confirms that it is privately profitable and that welfare gains are in the range of 0.8–2.2%; these can be higher for lower fees or lower cross-price elasticity between modes.

https://doi.org/10.1016/j.trb.2020.07.007