An integral interval timetable for long-distance passenger rail services: Time to reconsider targeting on-track competition

Abstract

In the course of introducing an integral interval timetable (IIT), it is possible to induce on-track competition. Regarding punctuality as an essential prerequisite for an IIT, we would not recommend doing so. Regarding overall welfare, the situation is less clear. We model both a route duopoly and a monopoly, and find that in the latter, trains are more punctual and fares are higher. This is because a monopolist is not exposed to intramodal price competition, which may be at the expense of quality in the form of punctuality. Furthermore, a monopolist has a fixed cost advantage when investing in punctuality. If the market is regulated in such a way that rail traffic is maximized, welfare is higher in a monopoly. If such regulation is not binding anyway, this result does not change without it. Otherwise, without regulation, welfare is higher in a monopoly if the lower delay costs overcompensate for the higher fare, so that more passengers travel by train, compared to a duopoly, or if the fact that in the monopoly, there are fewer passengers is overcompensated for by the higher monopoly profit.