Title: Competition and Quality: Evidence from High-Speed Rails and Airlines

Time: November 19 (Friday) 10:00-11:30

Location: Room 426, School of Economics

Speaker：Prof. Long Wang

Bio: Long Wang is an assistant professor in the School of Entrepreneurship and Management at the ShanghaiTech University in China. He received a Ph.D. in Real Estate Finance from the National University of Singapore in 2018. His research interests lie in urban economics, real estate finance, and Chinese economy. He has published in academic journals such as Journal of Public Economics, Journal of Urban Economics, Journal of Economic and Behavior Organization, and Real Estate Economics.

Abstract: The entry of High-Speed Railways (HSR) represents a disruptive competition to airlines, particularly for short- to medium-distance journeys. Utilizing a unique dataset that contains the details of all flights departing from Beijing to 113 domestic destinations in China since January 2009, we employ a difference-in-differences approach to examine the effects of HSR entry on the quality of service provided by airlines as proxied by their on-time performance and to identify the channels through which competition leads to quality improvement. We document two main findings. First, the competition from the entry of HSR leads to significant reductions in the mean and variance of travel delays on the affected airline routes. Second, the reductions in departure delays and taxi-in time at the destination airports are identified as the main sources of the improvement in the airlines' on-time performance. We provide indirect evidence that the airlines' improvement in operational efficiency is the most likely source of the delay reductions.