Subsidy policy design for high-speed rail express

Abstract

The growing demand for high-value cargo transportation and the development of high-speed rail networks have made high speed rail express (HSRE) feasible. Although high-speed rail offers lower carbon emissions, its higher operational costs necessitate government subsidies to balance corporate profitability and social benefits. To address the policy design of subsidies for HSRE, we first employed the Hotelling model to characterize logistics enterprises’ mode choice behavior, thereby determining the demand for both high-speed rail and road. Subsequently, a social welfare maximization model was developed incorporating producer surplus, consumer surplus, government expenditure, and environmental impact, deriving optimal subsidy values under different pricing scenarios. Finally, a case validation analysis was conducted using the HSRE service between Kunming and Chengdu in China. The research reveals that the subsidy value is proportional to the price difference between the two transport modes under fixed-prices scenario—the greater the disparity, the higher the required subsidy. While under equilibrium-prices scenario, the optimal subsidy value depends not only on intermodal cost differentials and carbon pricing but also on cargo time value, transport efficiency, terminal handling capacity, and transfer costs. These findings provide new insights for HSRE subsidy policies design.