I would if I could: Passing through VAT reductions in the german rail industry

Gernot Sieg and Jan Wessel

Economics of Transportation, 2022, vol. 32, issue C

Abstract: Germany’s state-owned train operator Deutsche Bahn made a credible pledge to completely pass through a VAT reduction to passengers. Using a price observation dataset, we find that pass-through rates for fixed-price tickets are indeed 100%, whereas pass-through rates for tickets with revenue-management-based prices can differ significantly from 100%. They vary over purchase-timing periods, departure weekdays, departure timeframes, and price levels, thereby indicating that revenue management systems can cause unequal pass-through to different customer groups. We also provide theoretical insights into the price-setting considerations of offering these two ticket types, and derive the monopoly pass-through rate for ad valorem taxes.

Keywords: VAT reduction; Pass-through rates; Fixed prices; Revenue-management prices; Passenger rail transport (search for similar items in EconPapers)
JEL-codes: H20 L92 R40 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2212012222000375
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecotra:v:32:y:2022:i:c:s2212012222000375

DOI: 10.1016/j.ecotra.2022.100286

Access Statistics for this article

Economics of Transportation is currently edited by Mogens Fosgerau and Erik Verhoef

More articles in Economics of Transportation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().