Deregulation and the Determinants of Entry: Evidence from the German Interurban Bus Industry

39 Pages Posted: 3 Aug 2016

See all articles by Niklas Dürr

Niklas Dürr

ZEW – Leibniz Centre for European Economic Research - Competition and Regulation Research Group

Kai Hüschelrath

ZEW – Leibniz Centre for European Economic Research

Date Written: July 15, 2016

Abstract

Two years after the deregulation of the German interurban bus industry in January 2013, two new entrants emerged as market leaders: MeinFernbus (MFB) and FlixBus (FB). We use a comprehensive route-level data set to investigate the determinants of route entry for both providers. Applying survival models, we find that both companies show an increased probability to enter populous, centrally located routes with large shares of young inhabitants; however, they both avoid entries into routes including an airport or with low quality rail connection. Furthermore, both market leaders refrain from entering small and medium-sized routes in which another provider is already operating. In large markets, however, they both show an increased entry probability independent of the presence of a competitor.

Keywords: Deregulation, entry, industry dynamics, interurban buses, survival analysis

JEL Classification: L92, L11, L20, C41, M20, R41

Suggested Citation

Dürr, Niklas and Hüschelrath, Kai, Deregulation and the Determinants of Entry: Evidence from the German Interurban Bus Industry (July 15, 2016). ZEW - Centre for European Economic Research Discussion Paper No. 16-054, Available at SSRN: https://ssrn.com/abstract=2817305 or http://dx.doi.org/10.2139/ssrn.2817305

Niklas Dürr

ZEW – Leibniz Centre for European Economic Research - Competition and Regulation Research Group ( email )

L7,1
Mannheim, 68161
Germany

Kai Hüschelrath (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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