When Japan National Railways (JNR) was privatized into six regionally monopolistic railway corporations in 1987, there emerged exceptional areas where the industrial structure of railway transportation happened to be duopolistic due to an operational reason. Leveraging on this natural experimental setting arising from the privatization of JNR, we estimate the impact of market competition on the service quality i.e., speed and scheduling of a high-speed rail (HSR) run by an oligopolistic service provider. The paper shows that the change in time costs is significantly lower in those segments where HSR is competing with a conventional rail, and that such effect is larger for the shorter-distance markets where the competition is presumably more intensive.

This work is partly supported by the Ministry of Education of Japan Grant-in-Aid for Scientific Research #24530295, 16K03628, 16H03610, 16H03673.