Analysis of Pricing Decision of the High-Speed Railway under Airline’s Competition: Based on the Same Route

Abstract

National policies on energy conservation and emission reduction call for the development of greener travel. The high-speed railway has irreplaceable advantages and status. At present, China’s high-speed railway mainly adopts a fixed pricing strategy, which has demerits such as insufficient demand and reduced profits, so that high-speed railway has a distinct disadvantage when competing with aviation. Accordingly, we investigate the high-speed railway’s optimal pricing strategy under the competition of airlines with the same route. Two pricing strategies are investigated for high-speed railway use: fixed pricing or dynamic pricing. Our analysis shows that dynamic pricing has positive effects on revenue and total social welfare. The development of high-speed railways is expected to play a major role in China’s transition to a low-carbon and green economic growth model, which is emphasized by the results.