Schedule Competition Revisited

This paper proposes and analyses a simple model of schedule competition, where transport providers choose service frequency and fares. The key assumptions are that passengers care about average schedule delay, a consequence of committing to travel before knowing their departure times, and that they exhibit brand loyalty to particular carriers. While the most general version of the model is not amenable to analysis, familiar functional-form assumptions produce a tractable framework that generates a host of useful comparativestatic results, along with a clear-cut efficiency evaluation. The model also sheds light on the phenomenon of excess transport capacity. © 2010 LSE and the University of Bath