Competition for Versus on the Rails: A Laboratory Experiment

European countries and Japan are contemplating more competition in passenger rail service. In the Netherlands, the Ministry of Transport was assigned responsibility for making a recommendation to Parliament for choosing between competition for the rails and competition on the rails. The Ministry commissioned the experiments reported here to acquire better understanding of the properties of the alternative policies. Competition on the rails involves allocation of rights to use station and time-slot routes by price bids in a combinatorial auction. Competition for the rails involves allocation of rights to regional monopolies by fare-structure bids for supplying a prespecified minimum schedule. Copyright Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association