A price discrimination based Cournot game model for high-speed rail and airline

Abstract

This study investigates the competitive game between high-speed rail and airline on price, profit and social welfare, taking into account the airline price discrimination. We build a multi-level price competition pricing Cournot model for high-speed rail and airline to shed light on the HSR-air transport competition impact of pricing discrimination when airline could offer multi-level class seats, and analyze the optimal pricing strategy of airlines and high-speed rail operators and their impact on social welfare. The analytical results demonstrate that: airline price dis-crimination will increase social welfare and reduce consumer surplus, both airfare and airline profit increase as the degree of price discrimination increases welfare. However, HSR fare and profit decreases with the increase of the degree of price discrimination.