Coopetition with a Risk-Pooling Arrangement in the Railroad Industry

Abstract The main purpose of this study was to investigate coopetition with a risk-pooling arrangement in the railroad industry. The study discusses whether railroad companies voluntarily sign free alternative transportation contracts, which are contracts where non-suspended lines provide railroad services to affected passengers when some lines are suspended. The main results of this study can be summarized as follows. First, railroad companies do voluntarily wish to sign free alternative transportation contracts. In other words, coopetition with a risk-pooling arrangement is always realized. Second, in the case of a monopolistic line, when the probability of an accident occurring is relatively high, it is desirable for policy makers to provide a new line and achieve a risk-pooling arrangement.