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

Abstract

This article investigates the impact of rail service interruptions on customer switching. Using booking data on intercity bus services, we exploit regional variation in rail service cancellations during a strike 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 transport mode. It is particularly pronounced on shorter routes and among leisure passengers travelling on weekends. The findings indicate that customers were previously under-experimenting. Our results imply that incentivising experimentation can foster competition, facilitate transformative change and raise welfare.