Review of Network Economics
Editor-in-Chief: Grzybowski, Lukasz
Ed. by Goetz, Georg / Pereira, Pedro
IMPACT FACTOR 2018: 0.080
5-year IMPACT FACTOR: 0.803
CiteScore 2018: 0.39
SCImago Journal Rank (SJR) 2018: 0.941
Source Normalized Impact per Paper (SNIP) 2018: 0.182
The Functioning of Inter-modal Competition in the Transportation Market: Evidence from the Entry of Low-cost Airlines in Germany
We investigate the entry of low-cost airlines (LCAs) in the German market. The strong competitive pressure of LCAs forced incumbent air and rail operators to reconsider their pricing strategy. Lufthansa reacted by a drastic cut of all prices for all intra-German origin and destinations (O&Ds). The physical conditions of DB, the incumbent railroad operator, made it harder to react. Being an open system, changing the price system on one O&Ds has substantial opportunity costs on other O&Ds in the same rail network. This imposes constraints on price strategies LCA and Lufthansa do not have to satisfy to the same extent.
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