Effects of inter- and intra-modal competition on prices and frequencies in the Interurban railway market: Evidence from Europe

Présentation de Florent Laroche - LAET, Université Lumière Lyon 2

Florent Laroche
En collaboration avec Ayana Lamatkhanova et Leny Grassot

Abstract: This paper explores the effect of competition on prices and frequencies for the Interurban rail market in Europe. The market is defined by long distance train services mixing classical speed and high speed. The intramodal competition is usually in “open access” for long distance services in Europe and can be formalized through the Herfindahl-Hirschman Index (HHI) commonly used to assess the level of concentration between different firms on a market. The intermodal competition takes into account the air transportation, as usually in the literature, but includes new type of services as coach services and carpooling services. The analysis is original by an extended perimeter including seven European countries and a total of 90 routes. The method is based on an econometric analysis and cross sectional regression. Results show that intra-modal competition have a significant impact on frequencies for long distance train services but no significant effect on prices in economic class. Otherwise, the effects of intermodal competition are limited mainly because of the strong differences between the market structures in terms of travel time, comfort or user’s preferences. It is the case of coach and carpool services, available when prices for train are high, but not of air transport which can drive train operators to decrease their prices in case of direct competition for long distance.

Keywords: competition; railway; intramodal; intermodal; interurban