Entry and competition in freight transport: the case of a prospective transalpine rail link between France and Italy
We analyze the expected effects of building a rail tunnel between Lyon and Turin on i) the market shares of the established and the new suppliers, and ii) consumer surplus. The prospective project consists of a 53km rail tunnel providing freight shippers with a new alpine path. We calibrate an equilibrium model where freight shippers choose a mode and alpine path to ship goods from a given origin to a given destination. Freight carriers strategically set prices for the differentiated products they supply. Deriving the market equilibrium, we simulate the entry of a quality-improved product and test its competitive viability. The prospective alpine path proves both competitive and welfare-enhancing on the regional market, loses its competitive edge on the wider North-South market, and leads to a modal shift on the West-East market. We argue that the new infrastructure is only one tool out of a global modal shift-oriented policy toolbox.
Year of publication: |
2010
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Authors: | Prady, Delphine ; Ullrich, Hannes |
Institutions: | Zentrum für Europäische Wirtschaftsforschung (ZEW) |
Subject: | Transalpine freight | New rail infrastructure | Simulation model | Competition |
Saved in:
freely available
Extent: | application/pdf |
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Series: | |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Number 10-010 |
Classification: | R41 - Transportation: Demand; Supply; Congestion; Safety and Accidents ; L92 - Railroads and Other Surface Transportation: Autos, Buses, Trucks and Water Carriers ; H54 - Infrastructures; Other Public Investment and Capital Stock ; L13 - Oligopoly and Other Imperfect Markets ; C63 - Computational Techniques |
Source: |
Persistent link: https://www.econbiz.de/10008556007