Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Thursday, March 14, 2013

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

Posted by D. Daniel Sokol

Marc Bataille (Monopolkommission) and Alexander Steinmetz (Monopolkommission) explore Intermodal competition on some routes in transportation networks: The case of inter urban buses and railways.

ABSTRACT: 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 pro table, competition on just some tracks can result in a collapse of the entire network. External e ects 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.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/03/intermodal-competition-on-some-routes-in-transportation-networks-the-case-of-inter-urban-buses-and-r.html

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