Analyzing Inter-modal Competition between High Speed Rail and Conventional Transport Systems: A Game Theoretic Approach

Abstract

A methodology is developed in order to assess the viability of transport infrastructure investment in the form of High Speed Rail (HSR). Public transportation mode operators such as HSR, conventional trains and buses, maximize their profits by varying prices and frequency for a given demand and infrastructure cost. In this study, the price competition between different operators is taken into consideration and the change in the existing market equilibrium due to the entry of the new mode is studied using the game theoretic approach. Hypothetical data for a particular route is used for game-based analysis. In this multiplayer game, the effect of introducing the new mode of transport on the Nash equilibrium is studied taking into account the competition between the other modes of transportation. The analysis of market share for the modes has been carried out using heterogeneity of the passengers based on the concept of Value-of-Time (VOT). The passengers are assumed to be intelligent and rational in choosing the mode that minimizes their generalized travel cost, which is a function of travel time weighted by the individual VOT and the monetary cost associated with the mode of travel. Thus, different combinations of entry and response strategies are studied for HSR and existing modes, and the impact of introduction of HSR is assessed in terms of profit, thus, reflecting on the sustainability and financial viability of the transport infrastructure investment.

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