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Service Provision on a Railway Network: An Experiment

Aurora García-Gallego (), Nikolaos Georgantzís () and Gerardo Sabater-Grande ()
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Gerardo Sabater-Grande: Laboratorio de Economia Experimental and Economics Department, Universitat Jaume I

No 12-14, Working Papers from NET Institute

Abstract: Inspired by the ongoing debate regarding the liberalization of the Spanish railway network, we use real-world information on the features of passenger transportation demand and the existing network infrastructure to build a complex experimental setting. We test the efficiency of alternative service provision obligations imposed to railway companies. Our results show that imposing a minimum service for less profitable connections not only improves consumer and overall welfare but will not harm the companies, because it enhances connectivity and the overall demand on the network. In the absence of such service provision restrictions, the companies failing to recognize the profitability of creating a complete network leave some connections unserved, thus reducing overall demand for passenger services.

Keywords: Transportation sector; Railway network; Experimental Economics (search for similar items in EconPapers)
JEL-codes: C92 L33 L51 L92 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2012-09
New Economics Papers: this item is included in nep-exp, nep-reg and nep-tre
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