Work

The Double-Edged Sword of Dynamic Pricing: Bidirectional Modal Shift and Carbon Leakage in High-Speed Rail

Year: 2026

Type: article

Abstract: While pricing policy has emerged as a critical demand-side lever for decarbonizing mobility, its bidirectional effects on modal shift remain unexplored. Dynamic pricing in high-speed rail (HSR) creates a double-edged environmental outcome: advance discounts attract passengers from aviation, yet last-minute premiums may reverse these gains. Using 2.4 million price observations from Madrid--Barcelona, we introduce a carbon leakage framework that quantifies this phenomenon for the first time. Our analysis reveals a structural tension: while early-bird pricing attracts 274,431 annual passengers from aviation---saving 23,650 tonnes CO2/year---last-minute scarcity premiums systematically drive passengers back to air travel. Literature-calibrated elasticity estimation (ε = −0.95) shows that 22.3% of last-minute tickets exceed the \euro{}120 aviation threshold, creating 1,511 tonnes CO2 leakage annually (6.4% offset of gross savings). Critically, scenario analysis demonstrates that price caps at \euro{}110--120 eliminate leakage entirely while preserving 94% of operator revenue. These findings establish actionable thresholds for carbon-aware revenue management, demonstrating that demand-side decarbonization requires not only attracting passengers to sustainable modes but also preventing their reversal to high-carbon alternatives.

Source: Sustainability

DOI: 10.3390/su18062802

Authors: Zhibin Xing, Chenghao Xing, Mengqiang Pan, Xinyu Gou

Institutions: Southwestern University of Finance and Economics, City University Malaysia

Language: English

Topic: Aviation Industry Analysis and Trends

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Sustainable cities and communities, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $2,896