Effect of the Introduction of High-Speed Trains on Consumer Welfare

31 Pages Posted: 23 May 2016

See all articles by Jisun Baek

Jisun Baek

KDI School of Public Policy and Management

Date Written: February 29, 2016

Abstract

This paper examines the impact of introducing high-speed trains on consumer welfare, taking the ensuing changes in train schedules into account. Based on the estimated demand model for travel which incorporates consumer’s heterogeneous preferences for travel schedules into the standard discrete-choice model, I separately evaluate the impact from adding high-speed trains and that from changes in train schedules. The results indicate that consumers who travel between two cities connected by high-speed trains benefit from the introduction of high-speed trains, while some travelers whose choice set does not include high-speed trains face a reduced frequency of non-high-speed trains, resulting in significant losses.

Keywords: Endogenous product characteristics, New product entry, Consumer surplus, High-speed train, Korea, KTX

JEL Classification: L13, L92

Suggested Citation

Baek, Jisun, Effect of the Introduction of High-Speed Trains on Consumer Welfare (February 29, 2016). KDI Journal of Economic Policy 2016, 38(1) 23-52, Available at SSRN: https://ssrn.com/abstract=2777358

Jisun Baek (Contact Author)

KDI School of Public Policy and Management ( email )

263 Namsejong-ro
Sejong-si 30149
Korea, Republic of (South Korea)

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