1. Price impact of high-speed rail competition between multiple full-service and low-cost operators on less congested corridors in Spain.
- Author
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Brenna, Claudio
- Subjects
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PRICE cutting , *PRICES , *MARKET pricing , *TICKET sales , *MARKET share - Abstract
The Spanish passenger railway market saw the entrance of two competitors in 2022–2023: the full-service operator Iryo and the low-cost operator Ouigo. Using a unique dataset of Spanish ticket price collected throughout an entire year and the Diff-In-Diff method, this paper investigates the impact on incumbent's prices of newcomers' entrance on the less congested corridors Madrid - Alicante and Madrid - Malaga/Sevilla. The Spanish government's strategy seems to be successful: the decision to lead the liberalisation process and the choice of having up to three asymmetric competitors induced a significant decrease in price even on the less attractive corridors, stimulating the demand and addressing the problem of under-utilization of some high-speed infrastructure. The results show that prices decreased by 28%–30% after nine months of competition. The impact has been the same on both the analysed corridors, despite the competition environment has been different in terms of number of competitors, pricing strategy and market share of those. • Spain is the first country with three competitors in the high-speed railway market. • Competition in high-speed rail in Spain reduced prices by 28%–30% in nine months. • The impact on incumbent's first-class and second-class prices was the same. • Both low-cost and full-service competitors similarly affected incumbent pricing. [ABSTRACT FROM AUTHOR]
- Published
- 2024
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