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Scheduled service versus personal transportation: the role of distance

Volodymyr Bilotkach, Xavier Fageda and Ricardo Flores-Fillol

No 2009-10, Working Papers from FEDEA

Abstract: This paper presents a theoretical and empirical analysis of the relationship between frequency of scheduled transportation services and their substitutability with personal transportation (using distance as a proxy). We study the interaction between a monopoly firm providing a high speed Scheduled service and private transportation (i.e., car). Interestingly, the carrier chooses to increase the frequency of service on longer routes when competing with personal transportation because by providing higher frequency (at extra cost) it can also charge higher fares which can boost its profits. However, in line with the results of earlier studies, frequency decreases for longer flights when driving is not a viable option. An empirical application of our analysis to the European airline industry confirms the predictions of our theoretical model.

Date: 2009-02
New Economics Papers: this item is included in nep-ure
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Journal Article: Scheduled service versus personal transportation: The role of distance (2010) Downloads
Working Paper: Scheduled Service Versus Personal Transportation: The Role of Distance (2009) Downloads
Working Paper: Scheduled service versus personal transportation: the role of distance (2008) Downloads
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