Scheduled Service Versus Personal Transportation: The Role of Distance

Research in Applied Economics Network, Vol. 13, 2008

47 Pages Posted: 26 May 2011

See all articles by Volodymyr Bilotkach

Volodymyr Bilotkach

Newcastle Business School

Xavier Fageda

University of Barcelona

Ricardo Flores-Fillol

Universitat Rovira i Virgili (URV)

Date Written: December 1, 2008

Abstract

This paper presents a theoretical and empirical analysis of the relationship between frequency of scheduled transportation services and their substitutability with personal transportation, using distance as a proxy. We study the interaction between a monopoly fi…rm providing a high-speed scheduled service and private transportation (i.e., car). Interestingly, the carrier chooses to increase the frequency of service on longer routes when competing with personal transportation because by providing higher frequency (at extra cost) it can also charge higher fares which can boost its profi…ts. However, in line with the results of earlier studies, frequency decreases for longer flights when driving is not a viable option. An empirical application of our analysis to the European airline industry confi…rms the predictions of our theoretical model.

Keywords: short-haul routes, long-haul route, flight frequency, distance

JEL Classification: L13, L2, L93

Suggested Citation

Bilotkach, Volodymyr and Fageda, Xavier and Flores-Fillol, Ricardo, Scheduled Service Versus Personal Transportation: The Role of Distance (December 1, 2008). Research in Applied Economics Network, Vol. 13, 2008, Available at SSRN: https://ssrn.com/abstract=1828627 or http://dx.doi.org/10.2139/ssrn.1828627

Volodymyr Bilotkach (Contact Author)

Newcastle Business School ( email )

208, City Campus East-1
Newcastle upon-Tyne, NE1 8ST
United Kingdom

Xavier Fageda

University of Barcelona ( email )

Av. Diagonal 690
08034 Barcelona
Spain
0034 934021947 (Phone)
0034 934024573 (Fax)

Ricardo Flores-Fillol

Universitat Rovira i Virgili (URV) ( email )

Dept. d'Economia (office 310), FCEE
Avinguda de la Universitat 1
Reus, Tarragona 43204
Spain
+34 977 75 98 51 (Phone)
+34 977 75 98 10 (Fax)

HOME PAGE: http://gandalf.fcee.urv.es/professors/RicardoFlores

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