Discussion Paper No.1503

Abstract :
This study shows the effects of the diversification of railway companies into real estate business on their primary business and the growth of commercial areas along railway lines. Methodologically, a model that combines the urban land use equilibrium model with the optimal train operation problem is formulated and the results of the numerical simulations suggest that the railway company should diversify into real estate in order to expand the retail market whose goods have property of cumulative attractiveness.

Keywords : Diversification of railway companies; Urban land use equilibrium; Agglomeration economies; MPEC