High Speed Rail Networks in Japan and Taiwan: A Cross Country Comparison of Rail Cost Structures

Abstract

Japan is facing increasing competition from China for the procurement of High-Speed Rail (HSR) construction contracts. In addition, once a HSR network is constructed, gaining and sustaining market share from other transport modes is difficult. This study estimates the rail cost functions of both the Japanese and the new Taiwanese HSR networks in order to investigate two issues: whether Japanese HSR technology can be successfully implemented overseas and whether Japan’s current HSR network can fight new competition from low cost airlines. We find that Japanese HSR operating performance can be successfully replicated in Taiwan and that the Tokaido Shinkansen can better compete with low cost airlines than the Sanyo Shinkansen.