Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/transb/v94y2016icp456-481.html
   My bibliography  Save this article

High-speed rail and air transport competition and cooperation: A vertical differentiation approach

Author

Listed:
  • Xia, Wenyi
  • Zhang, Anming
Abstract
This paper considers vertical differentiation between air transport and high-speed rail (HSR) with different ranges of travel distance to analyze the air-HSR competition effects on fares, traffic volumes and welfare, as well as the conditions under which air-HSR cooperation is welfare-enhancing. The analysis is conducted in a hub-and-spoke network with a network carrier, an HSR operator, and a spoke airline, taking into account potential hub airport capacity constraint. We find that air-HSR competition in the connecting market may result in the network airline charging an excessively high price in the HSR-inaccessible market. This effect is present even when the HSR-inaccessible route is a duopoly-airline market. On the other hand, air-HSR cooperation increases fares in the connecting market, and an improvement in rail speed or air-HSR connecting time reduces airfare on the routes where HSR and the airline compete. When the airline cannot serve all the markets due to limited hub airport capacity, it would withdraw from the market in which it has less competitive advantage over HSR. Finally, air-HSR cooperation is more likely to be welfare-improving when the hub airport is capacity constrained, and when either air transport or HSR exhibits strong economies of traffic density.

Suggested Citation

  • Xia, Wenyi & Zhang, Anming, 2016. "High-speed rail and air transport competition and cooperation: A vertical differentiation approach," Transportation Research Part B: Methodological, Elsevier, vol. 94(C), pages 456-481.
    • Handle: RePEc:eee:transb:v:94:y:2016:i:c:p:456-481
    DOI: 10.1016/j.trb.2016.10.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0191261516301175
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.trb.2016.10.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Meunier, David & Quinet, Emile, 2012. "Applications of transport economics and imperfect competition," Research in Transportation Economics, Elsevier, vol. 36(1), pages 19-29.
    2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    3. Emile Quinet & David Meunier, 2012. "Applications of transport economics and imperfect competition," PSE-Ecole d'économie de Paris (Postprint) halshs-00754577, HAL.
    4. Emile Quinet & David Meunier, 2012. "Applications of transport economics and imperfect competition," Post-Print halshs-00754577, HAL.
    5. Robert G. Harris, 1977. "Economies of Traffic Density in the Rail Freight Industry," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 556-564, Autumn.
    6. Dobruszkes, Frédéric, 2011. "High-speed rail and air transport competition in Western Europe: A supply-oriented perspective," Transport Policy, Elsevier, vol. 18(6), pages 870-879, November.
    7. Wan, Yulai & Ha, Hun-Koo & Yoshida, Yuichiro & Zhang, Anming, 2016. "Airlines’ reaction to high-speed rail entries: Empirical study of the Northeast Asian market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 532-557.
    8. Moshe Givoni & Frédéric Dobruszkes, 2013. "A Review of Ex-Post Evidence for Mode Substitution and Induced Demand Following the Introduction of High-Speed Rail," ULB Institutional Repository 2013/152140, ULB -- Universite Libre de Bruxelles.
    9. Xiaowen Fu & Tae H. Oum & Jia Yan, 2014. "An Analysis of Travel Demand in Japan's Intercity Market Empirical Estimation and Policy Simulation," Journal of Transport Economics and Policy, University of Bath, vol. 48(1), pages 97-113, January.
    10. Jan K. Brueckner, 2003. "International Airfares in the Age of Alliances: The Effects of Codesharing and Antitrust Immunity," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 105-118, February.
    11. Volodymyr Bilotkach & Kai Hüschelrath, 2011. "Antitrust Immunity For Airline Alliances," Journal of Competition Law and Economics, Oxford University Press, vol. 7(2), pages 335-380.
    12. Zhang, Anming & Czerny, Achim I., 2012. "Airports and airlines economics and policy: An interpretive review of recent research," Economics of Transportation, Elsevier, vol. 1(1), pages 15-34.
    13. Brander, James A. & Zhang, Anming, 1993. "Dynamic oligopoly behaviour in the airline industry," International Journal of Industrial Organization, Elsevier, vol. 11(3), pages 407-435, September.
    14. Harumi Ito & Darin Lee, 2007. "Domestic Code Sharing, Alliances, and Airfares in the U.S. Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 50(2), pages 355-380.
    15. Mikio Takebayashi, 2016. "Air Transport and High Speed Railway: How Would Collaboration Affect Service Performance?," Advances in Airline Economics, in: Airline Efficiency, volume 5, pages 197-220, Emerald Group Publishing Limited.
    16. Volodymyr Bilotkach, 2007. "Price effects of airline consolidation: evidence from a sample of transatlantic markets," Empirical Economics, Springer, vol. 33(3), pages 427-448, November.
    17. Jan K. Brueckner & Nichola J. Dyer & Pablo T. Spiller, 1992. "Fare Determination in Airline Hub-and-Spoke Networks," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 309-333, Autumn.
    18. Park, Jong-Hun & Zhang, Anming & Zhang, Yimin, 2001. "Analytical models of international alliances in the airline industry," Transportation Research Part B: Methodological, Elsevier, vol. 35(9), pages 865-886, November.
    19. Bergantino, Angela S. & Capozza, Claudia & Capurso, Mauro, 2015. "The impact of open access on intra- and inter-modal rail competition. A national level analysis in Italy," Transport Policy, Elsevier, vol. 39(C), pages 77-86.
    20. Brueckner, Jan K. & Pels, Eric, 2005. "European airline mergers, alliance consolidation, and consumer welfare," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 27-41.
    21. repec:hal:pseose:halshs-00754577 is not listed on IDEAS
    22. Brueckner, Jan K. & Proost, Stef, 2010. "Carve-outs under airline antitrust immunity," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 657-668, November.
    23. Jiang, Changmin & Zhang, Anming, 2014. "Effects of high-speed rail and airline cooperation under hub airport capacity constraint," Transportation Research Part B: Methodological, Elsevier, vol. 60(C), pages 33-49.
    24. Brueckner, Jan K., 2001. "The economics of international codesharing: an analysis of airline alliances," International Journal of Industrial Organization, Elsevier, vol. 19(10), pages 1475-1498, December.
    25. Volodymyr Bilotkach, 2005. "Price Competition between International Airline Alliances," Journal of Transport Economics and Policy, University of Bath, vol. 39(2), pages 167-190, May.
    26. Bamberger, Gustavo E & Carlton, Dennis W & Neumann, Lynette R, 2004. "An Empirical Investigation of the Competitive Effects of Domestic Airline Alliances," Journal of Law and Economics, University of Chicago Press, vol. 47(1), pages 195-222, April.
    27. Socorro, M. Pilar & Viecens, M. Fernanda, 2013. "The effects of airline and high speed train integration," Transportation Research Part A: Policy and Practice, Elsevier, vol. 49(C), pages 160-177.
    28. Adler, Nicole & Pels, Eric & Nash, Chris, 2010. "High-speed rail and air transport competition: Game engineering as tool for cost-benefit analysis," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 812-833, August.
    29. Chen, Yongmin & Gayle, Philip G., 2007. "Vertical contracting between airlines: An equilibrium analysis of codeshare alliances," International Journal of Industrial Organization, Elsevier, vol. 25(5), pages 1046-1060, October.
    30. Braeutigam, Ronald R & Daughety, Andrew F & Turnquist, Mark A, 1984. "A Firm Specific Analysis of Economies of Density in the U.S. Railroad Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 33(1), pages 3-20, September.
    31. Brueckner, Jan K & Whalen, W Tom, 2000. "The Price Effects of International Airline Alliances," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 503-545, October.
    32. Frédéric Dobruszkes, 2011. "High-speed rail and air transport competition in Western Europe: A supply-oriented perspective," ULB Institutional Repository 2013/96164, ULB -- Universite Libre de Bruxelles.
    33. Yang, Hangjun & Zhang, Anming, 2012. "Effects of high-speed rail and air transport competition on prices, profits and welfare," Transportation Research Part B: Methodological, Elsevier, vol. 46(10), pages 1322-1333.
    34. Moshe Givoni, 2006. "Development and Impact of the Modern High‐speed Train: A Review," Transport Reviews, Taylor & Francis Journals, vol. 26(5), pages 593-611, January.
    35. Takebayashi, Mikio, 2016. "How could the collaboration between airport and high speed rail affect the market?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 277-286.
    36. Brueckner, Jan K. & Spiller, Pablo T., 1991. "Competition and mergers in airline networks," International Journal of Industrial Organization, Elsevier, vol. 9(3), pages 323-342, September.
    37. Givoni, Moshe & Banister, David, 2006. "Airline and railway integration," Transport Policy, Elsevier, vol. 13(5), pages 386-397, September.
    38. Bergantino, Angela S. & Capozza, Claudia & Capurso, Mauro, 2015. "The impact of open access on intra- and inter-modal rail competition. A national level analysis in Italy," Transport Policy, Elsevier, vol. 39(C), pages 77-86.
    39. Ricardo Flores-Fillol & Rafael Moner-Colonques, 2007. "Strategic Formation of Airline Alliances," Journal of Transport Economics and Policy, University of Bath, vol. 41(3), pages 427-449, September.
    40. Volodymyr Bilotkach & Kai Hüschelrath, 2013. "Airline Alliances, Antitrust Immunity, and Market Foreclosure," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1368-1385, October.
    41. Lin, Ming Hsin, 2004. "Strategic airline alliances and endogenous Stackelberg equilibria," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 40(5), pages 357-384, September.
    42. Clewlow, Regina R. & Sussman, Joseph M. & Balakrishnan, Hamsa, 2014. "The impact of high-speed rail and low-cost carriers on European air passenger traffic," Transport Policy, Elsevier, vol. 33(C), pages 136-143.
    43. Albalate, Daniel & Bel, Germà & Fageda, Xavier, 2015. "Competition and cooperation between high-speed rail and air transportation services in Europe," Journal of Transport Geography, Elsevier, vol. 42(C), pages 166-174.
    44. Jiang, Changmin & Zhang, Anming, 2016. "Airline network choice and market coverage under high-speed rail competition," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 248-260.
    45. Park, Jong-Hun, 1997. "The effects of airline alliances on markets and economic welfare," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 33(3), pages 181-195, September.
    46. Moshe Givoni & Frédéric Dobruszkes, 2013. "A Review of Ex-Post Evidence for Mode Substitution and Induced Demand Following the Introduction of High-Speed Rail," Transport Reviews, Taylor & Francis Journals, vol. 33(6), pages 720-742, November.
    47. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2015. "Would competition between air transport and high-speed rail benefit environment and social welfare?," Transportation Research Part B: Methodological, Elsevier, vol. 74(C), pages 118-137.
    48. Behrens, Christiaan & Pels, Eric, 2012. "Intermodal competition in the London–Paris passenger market: High-Speed Rail and air transport," Journal of Urban Economics, Elsevier, vol. 71(3), pages 278-288.
    49. James A. Brander & Anming Zhang, 1990. "Market Conduct in the Airline Industry: An Empirical Investigation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 567-583, Winter.
    50. Graham, Daniel J. & Couto, Antonio & Adeney, William E. & Glaister, Stephen, 2003. "Economies of scale and density in urban rail transport: effects on productivity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 39(6), pages 443-458, November.
    51. Lin, Ming Hsin, 2008. "Airline alliances and entry deterrence," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 44(4), pages 637-652, July.
    52. Park, Yonghwa & Ha, Hun-Koo, 2006. "Analysis of the impact of high-speed railroad service on air transport demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(2), pages 95-104, March.
    53. Capozza, Claudia, 2016. "The effect of rail travel time on airline fares: First evidence from the Italian passenger market," Economics of Transportation, Elsevier, vol. 6(C), pages 18-24.
    54. Douglas W. Caves & Laurits R. Christensen & Michael W. Tretheway, 1984. "Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 471-489, Winter.
    55. Brueckner, Jan K & Spiller, Pablo T, 1994. "Economies of Traffic Density in the Deregulated Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 37(2), pages 379-415, October.
    56. Bilotkach, Volodymyr, 2007. "Complementary versus semi-complementary airline partnerships," Transportation Research Part B: Methodological, Elsevier, vol. 41(4), pages 381-393, May.
    57. Jan K. Brueckner & Darin N. Lee & Ethan S. Singer, 2011. "Alliances, Codesharing, Antitrust Immunity, And International Airfares: Do Previous Patterns Persist?," Journal of Competition Law and Economics, Oxford University Press, vol. 7(3), pages 573-602.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jiang, Changmin & Zhang, Anming, 2014. "Effects of high-speed rail and airline cooperation under hub airport capacity constraint," Transportation Research Part B: Methodological, Elsevier, vol. 60(C), pages 33-49.
    2. Jiang, Changmin & D'Alfonso, Tiziana & Wan, Yulai, 2017. "Air-rail cooperation: Partnership level, market structure and welfare implications," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 461-482.
    3. Zhang, Anming & Wan, Yulai & Yang, Hangjun, 2019. "Impacts of high-speed rail on airlines, airports and regional economies: A survey of recent research," Transport Policy, Elsevier, vol. 81(C), pages 1-19.
    4. Wang, Kun & Xia, Wenyi & Zhang, Anming & Zhang, Qiong, 2018. "Effects of train speed on airline demand and price: Theory and empirical evidence from a natural experiment," Transportation Research Part B: Methodological, Elsevier, vol. 114(C), pages 99-130.
    5. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2016. "Air transport and high-speed rail competition: Environmental implications and mitigation strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 261-276.
    6. Volodymyr Bilotkach, 2019. "Airline Partnerships, Antitrust Immunity, and Joint Ventures: What We Know and What I Think We Would Like to Know," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(1), pages 37-60, February.
    7. Tiziana D'Alfonso & Changmin Jiang & Valentina Bracaglia, 2015. "Air transport and high-speed rail competition: environmental implications and mitigation strategies," DIAG Technical Reports 2015-15, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    8. Álvarez-SanJaime, Óscar & Cantos-Sanchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, Jose J., 2020. "Pricing and infrastructure fees in shaping cooperation in a model of high-speed rail and airline competition," Transportation Research Part B: Methodological, Elsevier, vol. 140(C), pages 22-41.
    9. Wang, Kun & Xia, Wenyi & Zhang, Anming, 2017. "Should China further expand its high-speed rail network? Consider the low-cost carrier factor," Transportation Research Part A: Policy and Practice, Elsevier, vol. 100(C), pages 105-120.
    10. Czerny, Achim I. & Jost, Peter-J. & Lang, Hao & Mantin, Benny, 2021. "Carrier collaboration with endogenous networks: Or, the limits of what carrier collaboration can achieve under antitrust immunity," Journal of Air Transport Management, Elsevier, vol. 94(C).
    11. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2015. "Would competition between air transport and high-speed rail benefit environment and social welfare?," Transportation Research Part B: Methodological, Elsevier, vol. 74(C), pages 118-137.
    12. Su, Min & Luan, Weixin & Fu, Xiaowen & Yang, Zaili & Zhang, Rui, 2020. "The competition effects of low-cost carriers and high-speed rail on the Chinese aviation market," Transport Policy, Elsevier, vol. 95(C), pages 37-46.
    13. Liu, Shuli & Wan, Yulai & Ha, Hun-Koo & Yoshida, Yuichiro & Zhang, Anming, 2019. "Impact of high-speed rail network development on airport traffic and traffic distribution: Evidence from China and Japan," Transportation Research Part A: Policy and Practice, Elsevier, vol. 127(C), pages 115-135.
    14. Alderighi, Marco & Gaggero, Alberto A. & Piga, Claudio A., 2015. "The effect of code-share agreements on the temporal profile of airline fares," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 42-54.
    15. Avenali, Alessandro & Bracaglia, Valentina & D'Alfonso, Tiziana & Reverberi, Pierfrancesco, 2018. "Strategic formation and welfare effects of airline-high speed rail agreements," Transportation Research Part B: Methodological, Elsevier, vol. 117(PA), pages 393-411.
    16. Zhu, Feng & Wu, Xu & Cao, Chengxuan, 2021. "High-speed rail and air transport competition under high flight delay conditions in China: A case study of the Beijing-Shanghai corridor," Utilities Policy, Elsevier, vol. 71(C).
    17. Zhu, Zhenran & Zhang, Anming & Zhang, Yahua, 2018. "Connectivity of intercity passenger transportation in China: A multi-modal and network approach," Journal of Transport Geography, Elsevier, vol. 71(C), pages 263-276.
    18. Xia, Wenyi & Jiang, Changmin & Wang, Kun & Zhang, Anming, 2019. "Air-rail revenue sharing in a multi-airport system: Effects on traffic and social welfare," Transportation Research Part B: Methodological, Elsevier, vol. 121(C), pages 304-319.
    19. Calzada, Joan & Fageda, Xavier & Safronov, Roman, 2022. "How do global airline alliances affect flight frequency? Evidence from Russia," Journal of Air Transport Management, Elsevier, vol. 98(C).
    20. Bilotkach, Volodymyr & Hüschelrath, Kai, 2019. "Balancing competition and cooperation: Evidence from transatlantic airline markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 120(C), pages 1-16.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transb:v:94:y:2016:i:c:p:456-481. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/548/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.