Due to the network nature of rail systems, the opening of peripheral infrastructure sections can have spillover effects on adjacent markets. Using a unique database and a difference-in-differences methodology, we assess the capacity-based theory in the railway sector. The analysis warns of possible negative effects from the opening of a peripheral high-speed rail section, such as price increases and reduced seat availability on existing services that are extended to the new section. It also emphasises the need for effective planning and synchronisation of supply adjustments with demand growth to ensure the full benefits of new high-speed rail infrastructure.
Claudio Brenna (Mon,) studied this question.