Competition in transit markets
Competition in transit markets
Despite regulatory reforms in a number of countries, competition in transit markets is still relatively rare. Moreover, where it does occur it tends to be small group in nature and the outcomes are difficult to predict. In this paper, simulation models of competition in inter-urban rail markets and urban bus markets are developed and applied in studies of Great Britain and Sweden. It is found that on busy routes head-on competition is commercially feasible (although for rail this assumes low access charges) but is not socially desirable. For routes with thin demand (or high access costs), competition may be limited to cream skimming. In most competed cases, there appears to be a tendency for the provision of too much service, at too high price and (at least for bus) at too low quality. Rather than classical Bertrand–Cournot oligopoly models, transit markets may be best described by models of oligopolistic competition based on horizontal product differentiation
bus, rail, oligopoly, oligopolistic competition
75-84
Preston, John
ef81c42e-c896-4768-92d1-052662037f0b
2008
Preston, John
ef81c42e-c896-4768-92d1-052662037f0b
Preston, John
(2008)
Competition in transit markets.
[in special issue: Transit Economics]
Research in Transportation Economics, 23 (1), .
(doi:10.1016/j.retrec.2008.10.009).
Abstract
Despite regulatory reforms in a number of countries, competition in transit markets is still relatively rare. Moreover, where it does occur it tends to be small group in nature and the outcomes are difficult to predict. In this paper, simulation models of competition in inter-urban rail markets and urban bus markets are developed and applied in studies of Great Britain and Sweden. It is found that on busy routes head-on competition is commercially feasible (although for rail this assumes low access charges) but is not socially desirable. For routes with thin demand (or high access costs), competition may be limited to cream skimming. In most competed cases, there appears to be a tendency for the provision of too much service, at too high price and (at least for bus) at too low quality. Rather than classical Bertrand–Cournot oligopoly models, transit markets may be best described by models of oligopolistic competition based on horizontal product differentiation
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Published date: 2008
Keywords:
bus, rail, oligopoly, oligopolistic competition
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Local EPrints ID: 74299
URI: http://eprints.soton.ac.uk/id/eprint/74299
ISSN: 0739-8859
PURE UUID: 469ae4ae-8dd9-439a-bc1c-8abc3fe97a0d
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Date deposited: 12 Mar 2010
Last modified: 14 Mar 2024 02:51
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