Assessment of market power on the route Prague – Ostrava

Chini, Jakub; Kvizda, Martin; Solnička, Jakub; Špetík, Ondřej

doi:10.1016/j.trpro.2021.06.029

Cited by 4 publications

(3 citation statements)

References 2 publications

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“…Tomeš et al (2016) report of an extensive price war occurred on Czech tracks during the first years of open-access competition. This war led to a sudden reduction of 42% of prices, that together with the doubling of passengers made a +10% overall revenues (Tomeš & Jandová, 2018; Chini et al, 2021). However, no price elasticity is found in the country, whatever is the state of competition (Fitzová et al, 2021).…”

Section: Open-access Competition In Europe and Focus On Pricesmentioning

confidence: 99%

A Difference-In-Difference Approach to Estimate the Price Effect of Market Entry in High-Speed Rail

Beria

Tolentino

Shtele

et al. 2022

Competition and Regulation in Network Industries

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The effect of competition on prices in the passenger transport sector can be difficult to estimate because of many influencing factors such as state regulation, demand, seasonality, and reactions of indirect competitors. A case of great interest in the rail sector is Italy, where on-track competition in the high-speed segment has been in place for nearly ten years. The paper aims at answering the question whether—and how much—incumbent’s prices are affected when competition starts on a route previously in monopoly. The case is the start of operations on the Turin–Milan–Venice route, where Italo entered in May 2018. Adopting a difference-in-difference approach, we check if Trenitalia changed the price strategy on the route before and after the entry, with respect to two control groups. The addition of placebo tests allows us to understand the ranges of significance of the results and to estimate the noise level of the estimates. Our findings suggest that the start of competition led to lower prices in the short-medium period. In the specific case, the Milano–Venezia route saw Trenitalia’s prices reduced by 21–26% (±2–5%) in a time span of 84–140 days after Italo’s entry and for advanced bookings from 2 to 10 days. Last-day prices remain unchanged, while early bookings are reduced by just 9%. This price reduction does not remain stable in the longer term, when other effects add up and blur the effect of the entry. Nevertheless, we keep observing a smaller, ∼15%, but still negative prices change.

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Section: Open-access Competition In Europe and Focus On Pricesmentioning

confidence: 99%

A Difference-In-Difference Approach to Estimate the Price Effect of Market Entry in High-Speed Rail

Beria

Tolentino

Shtele

et al. 2022

Competition and Regulation in Network Industries

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“…3 Then, our invesigation was focused only on passenger railway market. On the Prague-Ostrava line, the connection was provided by inter-city rail services and night inter-city rail services (Chini et al, 2021). Therefore, we have further investigated the substitution patterns between these two types of services in order to conclude whether these services belong to one relevant market.…”

Section: Relevant Market Definitionmentioning

confidence: 99%

“… Source: own processing based on Chaps timetables and Chini et al (2021). a Gradually since 2013. b Gradually since 2014.…”

Section: Assessment Of Dominancementioning

confidence: 99%

What is the real power of incumbents? Case study on the Czech Republic

Chini

Kvizda

Špetík

2023

Competition and Regulation in Network Industries

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After an introduction of competition due to liberalisation, there is an expectation of lower prices and better quality. However, these overall positive effects could be also driven by the incumbent’s incentive to exclude competition within the liberalised markets. Such a situation occurred on the Prague-Ostrava line where liberalisation brought lower prices and an increase in quality. However, it also brought multiple accusations by both the Czech competition authority and the European Commission of the state-owned incumbent, České dráhy, that it had engaged in predatory pricing. This paper then assesses whether the price decreases within this line were driven by actual competition or by predatory behaviour of České dráhy by analysing the position of České dráhy. The aim of this paper therefore is to assess the real market power of the Czech state incumbent, České dráhy, on the Prague-Ostrava line. To achieve this aim, we used unique data we had gathered from our previous research (such as price development, market shares and customer behaviour). Our results then show that it is unlikely that České dráhy could have acted independently of its competitors and customers, which indicates that it could not have had a dominant position.

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