OD-Differentiated Rail Subsidies for Modal Shift: Incorporating Mode Choice and OD Matching

Rail subsidies are widely recognized as an effective policy instrument for promoting modal shift from road to rail. However, existing studies rarely consider shippers’ mode choice and origin-destination (OD) matching behavior jointly in subsidy scheme design. This study fills this gap by developing a bi-level multi-objective programming model to determine differentiated subsidy rates for each OD pair. The upper level optimizes economic and environmental objectives, while the lower level predicts shippers’ behavior using a combined spatial interaction and logit model. A genetic algorithm with a membership function approach is designed to solve the model. Using Beijing’s sand and gravel aggregate freight network as a case study, results show that the subsidy policy reduces carbon emissions by 46% and shifts 60.04 million tons of freight from road to rail, with the share of rail freight rising from less than 1% to about 62%. The optimal subsidy rates exhibit significant spatial heterogeneity. Compared with a uniform subsidy scheme, the OD-differentiated scheme performs better in both economic and environmental terms. Sensitivity analyses show that the total subsidy cap affects the results the model can achieve, and that a trade-off exists between the economic and environmental objectives.