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Duopoly prices under congested access

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  • Kurt Van Dender

Abstract

. Consider two firms, at different locations, supplying a homogenous good at constant marginal production cost. Consumers incur travel costs to the firm for each unit purchased, and the travel costs increase with the amount of travel to each firm (congestion). When all traffic and all congestion are generated by travel to a duopolist, both the Nash–Bertrand equilibrium prices and the Nash–Cournot equilibrium prices exceed the sum of the marginal production cost and the marginal external travel cost. However, when the road is shared by travelers to the duopolists' facilities and travelers in competitive markets, the Nash–Bertrand duopoly price equals the competitive price and the Nash–Cournot price contains a markup.

Suggested Citation

  • Kurt Van Dender, 2005. "Duopoly prices under congested access," Journal of Regional Science, Wiley Blackwell, vol. 45(2), pages 343-362, May.
    • Handle: RePEc:bla:jregsc:v:45:y:2005:i:2:p:343-362
    DOI: 10.1111/j.0022-4146.2005.00374.x
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    Cited by:

    1. Huang, Naqun & Lien, Jaimie W. & Zheng, Jie, 2023. "To acquire or compete? Government intervention in transportation under different route structures," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 172(C).
    2. de Palma, André & Ordás Criado, Carlos & Randrianarisoa, Laingo M., 2018. "When Hotelling meets Vickrey. Service timing and spatial asymmetry in the airline industry," Journal of Urban Economics, Elsevier, vol. 105(C), pages 88-106.
    3. Hörcher, Daniel & De Borger, Bruno & Graham, Daniel J., 2023. "Subsidised transport services in a fiscal federation: Why local governments may be against decentralised service provision," Economics of Transportation, Elsevier, vol. 34(C).
    4. Ubbels, Barry & Verhoef, Erik T., 2008. "Governmental competition in road charging and capacity choice," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 174-190, March.
    5. Pavlyuk, Dmitry, 2012. "Airport Benchmarking and Spatial Competition: a Critical Review," MPRA Paper 43391, University Library of Munich, Germany.
    6. de Palma, Andre & Proost, Stef, 2006. "Imperfect competition and congestion in the City," Journal of Urban Economics, Elsevier, vol. 60(2), pages 185-209, September.
    7. Yu, Xiaojuan & van den Berg, Vincent A.C. & Verhoef, Erik T. & Li, Zhi-Chun, 2022. "Will all autonomous cars cooperate? Brands’ strategic interactions under dynamic congestion," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    8. De Borger, B. & Dunkerley, F. & Proost, S., 2007. "Strategic investment and pricing decisions in a congested transport corridor," Journal of Urban Economics, Elsevier, vol. 62(2), pages 294-316, September.
    9. De Borger, Bruno & Van Dender, Kurt, 2006. "Prices, capacities and service levels in a congestible Bertrand duopoly," Journal of Urban Economics, Elsevier, vol. 60(2), pages 264-283, September.
    10. Basso, Leonardo J. & Zhang, Anming, 2007. "Congestible facility rivalry in vertical structures," Journal of Urban Economics, Elsevier, vol. 61(2), pages 218-237, March.
    11. Grahn-Voorneveld, Sofia, 2011. "Sharing profit in parallel and serial transport networks," Working papers in Transport Economics 2011:7, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    12. Min Ju Bae & Ek Peng Chew & Loo Hay Lee & Anming Zhang, 2013. "Container transshipment and port competition," Maritime Policy & Management, Taylor & Francis Journals, vol. 40(5), pages 479-494, September.
    13. Bruno De Borger & Denis De Bruyne, 2011. "Port Activities, Hinterland Congestion, and Optimal Government Policies The Role of Vertical Integration in Logistic Operations," Journal of Transport Economics and Policy, University of Bath, vol. 45(2), pages 247-275, May.
    14. Fay Dunkerley & Andre De Palma & Stef Proost, 2009. "Spatial Asymmetric Duopoly With An Application To Brussels' Airports," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 529-553, August.
    15. Li, Shuai & Cai, Jiannan & Cai, Hubo, 2019. "Infrastructure privatization analysis: A public-private duopoly game," Transport Policy, Elsevier, vol. 83(C), pages 80-87.
    16. De Borger, Bruno & Proost, Stef, 2012. "Transport policy competition between governments: A selective survey of the literature," Economics of Transportation, Elsevier, vol. 1(1), pages 35-48.
    17. van den Berg, Vincent A.C., 2012. "Auctions for private congestible infrastructures," MPRA Paper 40103, University Library of Munich, Germany.
    18. Shao, Jing & Yang, Hangjun & Xing, Xiaoqiang & Yang, Liu, 2016. "E-commerce and traffic congestion: An economic and policy analysis," Transportation Research Part B: Methodological, Elsevier, vol. 83(C), pages 91-103.
    19. van den Berg, Vincent A.C., 2013. "Serial private infrastructures," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 186-202.
    20. de Palma, André & Kilani, Moez & Lindsey, Robin, 2007. "Maintenance, service quality and congestion pricing with competing roads," Transportation Research Part B: Methodological, Elsevier, vol. 41(5), pages 573-591, June.
    21. Randrianarisoa, Laingo M. & Zhang, Anming, 2019. "Adaptation to climate change effects and competition between ports: Invest now or later?," Transportation Research Part B: Methodological, Elsevier, vol. 123(C), pages 279-322.

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