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Entry and competition in freight transport: the case of a prospective transalpine rail link between France and Italy

Delphine Prady and Hannes Ullrich

No 10-010, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We analyze the expected effects of building a rail tunnel between Lyon and Turin on i) the market shares of the established and the new suppliers, and ii) consumer surplus. The prospective project consists of a 53km rail tunnel providing freight shippers with a new alpine path. We calibrate an equilibrium model where freight shippers choose a mode and alpine path to ship goods from a given origin to a given destination. Freight carriers strategically set prices for the differentiated products they supply. Deriving the market equilibrium, we simulate the entry of a quality-improved product and test its competitive viability. The prospective alpine path proves both competitive and welfare-enhancing on the regional market, loses its competitive edge on the wider North-South market, and leads to a modal shift on the West-East market. We argue that the new infrastructure is only one tool out of a global modal shift-oriented policy toolbox.

Keywords: Transalpine freight; New rail infrastructure; Simulation model; Competition (search for similar items in EconPapers)
JEL-codes: C63 H54 L13 L92 R41 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-cmp, nep-com and nep-ure
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:10010

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