High-speed rail and air transport competition: Game engineering as tool for cost-benefit analysis

This research develops a methodology to assess infrastructure investments and their effects on transport equilibria taking into account competition between multiple privatized transport operator types. The operators, including high-speed rail, hub-and-spoke legacy airlines and regional low-cost carriers, maximize best response functions via prices, frequency and train/plane sizes, given infrastructure provision, cost functions and environmental charges. The methodology is subsequently applied to all 27 European Union countries, specifically analyzing four of the prioritized Trans-European networks. The general conclusions suggest that the European Union, if interested in maximizing overall social welfare, should encourage the development of the high-speed rail network across Europe. (C) 2010 Elsevier Ltd. All rights reserved.