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Estimating Travellers’ Preferences for Competition in Commercial Passenger Rail Transport

Johannes Paha (), Dirk Rompf and Christiane Warnecke
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Dirk Rompf: University of Giessen
Christiane Warnecke: University of Giessen

No 201137, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: The current level of competition in European commercial passenger rail markets is low and empirical data on customer preferences in intramodal competition has hardly been available, yet. Our study raises the knowledge of competition in commercial passenger rail by exploring the determinants of customers’ choice behaviour on two cross-border routes, Cologne-Brussels and Cologne-Amsterdam. We analyse stated preference information from about 700 on-train interviews by means of multinomial Logit regressions. Our analysis indicates that customers experiencing competition (Cologne-Brussels) show a higher preference for competitive services than customers for whom competition is a purely hypothetical situation (Cologne-Amsterdam). Moreover, travellers show a status quo bias, i.e. a preference for the service provider on whose trains they were interviewed which partly stems from switching costs. These findings regarding status quo bias and switching costs complement previous studies on the outcome of intramodal competition, implying that entry is even more difficult than they predicted.

Keywords: Competition; Passenger; Rail; Transport; Discrete Choice; Multinomial Logit (search for similar items in EconPapers)
JEL-codes: C25 D12 D40 L92 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2011
New Economics Papers: this item is included in nep-bec, nep-com, nep-dcm, nep-eur and nep-ure
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