Intermodal and Intramodal Competition in Passenger Rail Transport

Abstract

The objective of the paper is to elaborate a simulation model to analyze inter- and intra-modal competition in the transport industry, based on game theory models. In our setting, consumers choose a transport mode and an operator to travel on a given city-pair; operators strategically decide on prices for the types of service they provide. We derive the market equilibrium and simulate potential scenarios. In particular we measure the impact of entry by a low cost train operator and the effect of a kerosene tax. Hence our framework could serve as a tool to measure the effectiveness of competition on a relevant market or to design marketing strategies. More generally it can be applied in cases of oligopolistic competition when detailed data are not available.

Keywords: Product differentiation, relevant transport market, simulation model

JEL Classification: L11, L13, L92, L93, L98, C81, C35