The Functioning of Inter-modal Competition in the Transportation Market: Evidence from the Entry of Low-cost Airlines in Germany
We investigate the entry of low-cost airlines (LCAs) in the German market. The strong competitive pressure of LCAs forced incumbent air and rail operators to reconsider their pricing strategy. Lufthansa reacted by a drastic cut of all prices for all intra-German origin and destinations (O&Ds). The physical conditions of DB, the incumbent railroad operator, made it harder to react. Being an open system, changing the price system on one O&Ds has substantial opportunity costs on other O&Ds in the same rail network. This imposes constraints on price strategies LCA and Lufthansa do not have to satisfy to the same extent.
Year of publication: |
2009
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Authors: | Friebel, Guido ; Niffka, Marko |
Published in: |
Review of Network Economics. - De Gruyter, ISSN 1446-9022, ZDB-ID 2139394-1. - Vol. 8.2009, 2
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Publisher: |
De Gruyter |
Saved in:
Online Resource
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