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Analyzing the effect of government subsidy on shippers’ mode switching behavior in the Belt and Road strategic context

Tanmoy Kundu and Jiuh-Biing Sheu

Transportation Research Part E: Logistics and Transportation Review, 2019, vol. 129, issue C, 175-202

Abstract: The Chinese government is offering subsidies to promote the recently developed China-Europe rail freight corridor under its Belt and Road Initiative (BRI). Despite significant subsidies, the rail mode (China Railway Express) continues to struggle with low load factor. Accordingly, a competition model (rail vs. maritime) grounded on game-theoretic technique is proposed to analyze the effect of the government subsidy on shippers’ mode switching (from maritime to rail) behavior. Analytical results based on a case of China-Germany rail freight transportation describe shippers’ mode switching patterns in response to a mode subsidy and suggest a subsidy scheme for the government.

Keywords: Belt and Road Initiative; Mode switching behavior; Mode subsidy; China-Europe freight; Game theory (search for similar items in EconPapers)
Date: 2019
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