Analyzing the effect of government subsidy on shippers' mode switching behavior in the Belt and Road strategic context
The Chinese government is offering subsidies to promote the recently developed China Europe rail freight corridor under its Belt and Road Initiative (BRI) Despite significant subsidies, the rail mode (China Railway Express) continues to struggle with low load factor. Accordingly, a competition model (rail vs. maritime) grounded on game theoretic technique is proposed to analyze the effect of the government subsidy on shippers' mode switching (from maritime to rail) behavior. Analytical results based on a case of China Germany rail freight transportation describe shippers' mode switching patterns in response to a mode subsidy and suggest a subsidy scheme for the government.
Transportation Research Part E: Logistics and Transportation Review