The impact of delays on the welfare effects of on-track competition: The case of transfer passengers with operator-tied tickets

Abstract

When connecting trains may be missed due to delays, and passengers are insu ciently flexible due to operator-tied ticketing, ontrack competition may reduce e↵ective frequency. We analyze passengers who share ↵ preferences for being on time and a price-sensitive demand, but di↵er in the preferred arrival time. If the probability of missing a connection due to a delay is suciently high, both producer and consumer surplus in a duopoly with reduced e↵ective frequency is smaller than in the monopoly case. Apart from reducing unpunctuality, ensuring the transferability of tickets, and switching to competition for the market, may constitute (regulatory) remedies. JEL: L92, L98, R48