WHU – Working Paper Series in Economics
ISSN 2511-1159
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- 2010 (2)
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- Complementarity (1)
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- Chair of Organization Theory (2) (show_all)
WP 10/05
This paper considers a transport network with two firms that operate a parallel service on a hub-to-hub connection and monopoly services on spoke-to-hub connections under increasing returns to scale. We find the following: A symmetric equilibrium cannot occur under independent (non-cooperative) pricing when the number of spoke-to-spoke passengers becomes positive. The effect of cooperative pricing on mark-ups in spoke-to-hub, hub-to-hub and spoke-to-spoke markets (where double marginalization can occur) can be positive or negative. Cooperation can reduce total welfare though hub-to-hub markets are small.
WP 10/03
The regulation of rail network access is a key component of the EU policy that aims to strengthen rail markets. Two specific regulations are proposed: (i) a priority for long-distance (freight) services and (ii) a scarcity premium. Based on a congested network with two rail links, numerical simulations demonstrate that total surplus can be greater under the priority rule, which depends on the network charge per train-kilometer. Consumer surplus, on the other hand, is always greater under the priority rule, while fixed network-cost recovery is easier to achieve if a scarcity premium exists.