High-Speed Rail & Air Transport Competition: Game Engineering as Tool for Cost-Benefit Analysis

Abstract

This paper develops a methodology to assess transport infrastructure investments and their effects on a Nash equilibria taking into account competition between multiple privatized transport operator types. The operators, including high-speed rail, hub and spoke legacy airlines and low cost carriers, maximize profit functions via prices, frequency and train/plane sizes, given infrastructure provision and costs and environmental charges. The methodology is subsequently applied to all 27 European Union countries, specifically analyzing four of the prioritized Trans-European Networks.

Keywords: airlines, high-speed rail, networks, applied game theory, infrastructure pricing

JEL Classification: R40, L92, L93