Striking evidence: The impact of railway strikes on competition from intercity bus services in Germany

This paper investigates the impact of the largest rail strikes in German history on intercity buses. Using unique booking data of bus services, we exploit variation in rail service cancellations across routes to show that the disruption in rail transport increases bus ticket sales. The effect persists beyond the strike, indicating that travellers do not return to their originally preferred mode of transport. It is particularly pronounced for passengers travelling on weekends. The findings suggest that customers were previously under-experimenting. From a policy perspective, our results highlight the need to incentivise experimentation to foster competition, facilitate transformative change and raise welfare.

Kiel Institute Experts