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Duopoly prices under congested access

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  • Kurt Van Dender
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    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. Copyright Blackwell Publishing Inc. 2005

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Regional Science.

    Volume (Year): 45 (2005)
    Issue (Month): 2 ()
    Pages: 343-362

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    Handle: RePEc:bla:jregsc:v:45:y:2005:i:2:p:343-362

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    Cited by:
    1. Pavlyuk, Dmitry, 2012. "Airport Benchmarking and Spatial Competition: a Critical Review," MPRA Paper 43391, University Library of Munich, Germany.
    2. Andre de Palma & Stef Proost, 2004. "Imperfect competition and congestion in the City," Energy, Transport and Environment Working Papers Series ete0409, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
    3. DE BORGER, Bruno & DUNKERLEY, Fay & PROOST, Stef, 2006. "Strategic investment and pricing decisions in a congested transport corridor," Working Papers 2006021, University of Antwerp, Faculty of Applied Economics.
    4. 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.
    5. van den Berg, Vincent A.C., 2012. "Auctions for private congestible infrastructures," MPRA Paper 40103, University Library of Munich, Germany.
    6. Fay Dunkerley & André De Palma & Stef Proost, 2008. "Spatial asymmetric duopoly with an application to Brussels' airports," Working Papers hal-00348443, HAL.
    7. repec:dgr:uvatin:2012087 is not listed on IDEAS
    8. van den Berg, Vincent A.C., 2013. "Serial private infrastructures," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 186-202.
    9. repec:dgr:uvatin:2006036 is not listed on IDEAS
    10. 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.
    11. 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.
    12. 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.
    13. 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).

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