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

When connecting trains may be missed due to delays, and passengers are insufficiently flexible due to operator-tied ticketing, on-track competition may reduce effective frequency. We analyze passengers who share α−β−γ− preferences for being on time and a price-sensitive demand, but differ in the preferred arrival time. If the probability of missing a connection due to a delay is sufficiently high, both producer and consumer surplus in a duopoly with reduced effective 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