I think the main factor was not railroad-related at all: the state (and likely federal) departments of transportation were eager to use the ex-DL&W right-of-way for highway construction. The former Erie route from Binghamton westward had tighter curves, limited clearance between the tracks and adjacent roads or rivers, and ran through the center of the various towns. The DL&W main offered the possibility of broad, sweeping highway curves without running through the central business district of the towns (although this was inevitable in some areas, such as Waverly). In the end, the need to acquire land to build the Southern Tier Expressway and I-390 sealed the fate of the Lackawanna west of Binghamton.
Another factor is, of course, that the Erie side did have more online customers in the towns that it served. As much as I'd have loved to have seen the DL&W retained between Binghamton and Painted Post based on engineering characteristics, doing so would have resulted in the loss of far more online customers. It's also unfortunate that the DL&W 's high-speed trackage across the flatlands of Western New York couldn't be saved, but it wouldn't have made sense to build a connection to shift from the Erie route via Hornell back to DL&W for the last 50 or so miles into Buffalo.
The third factor is, given the high rate of taxation in NY State, railroads are quick to abandon unused or duplicate trackage. Clearly, from an economic standpoint, one of the parallel routes had to go. R.I.P., DL&W.
"dlandw" on railroad.net