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A monopolistic market for advanced traveller information systems and road use efficiency

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  • Zhang, Rong
  • Verhoef, Erik T.

Abstract

Advanced traveller information systems (ATIS) are likely to exhibit significant economies of scale in production and operation. Private provision would therefore typically occur under considerable market power. An important policy question is whether the resulting distortions would aggravate or reduce distortions in the transport market itself, notably external effects such as congestion. We consider such questions by presenting an integrated model that captures the interactions between a congested transport market and a monopolistic market for advanced traveller information systems (ATIS). Three market failures operate simultaneously: congestion on the road, a declining average benefit of information when information penetration rises, and monopolistic pricing by the provider of information. Some key results are as follows. Monopoly information pricing appears not to be the most attractive option from a system efficiency viewpoint. A subsidy in the information market can help realise a second-best optimum of road use. Relatively low uncertainty on the road and high information costs limit the monopolist's profit on the information market, as well as relative system efficiency. While relatively inelastic demand for mobility, counter intuitively, negatively affects the monopolist's profit, the relative social benefits from private information peak at intermediate demand elasticities.

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Bibliographic Info

Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

Volume (Year): 40 (2006)
Issue (Month): 5 (June)
Pages: 424-443

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Handle: RePEc:eee:transa:v:40:y:2006:i:5:p:424-443

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References

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  1. Emmerink, Richard H. M. & Verhoef, Erik T. & Nijkamp, Peter & Rietveld, Piet, 1998. "Information policy in road transport with elastic demand: Some welfare economic considerations," European Economic Review, Elsevier, vol. 42(1), pages 71-95, January.
  2. Yin, Yafeng & Yang, Hai, 2003. "Simultaneous determination of the equilibrium market penetration and compliance rate of advanced traveler information systems," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(2), pages 165-181, February.
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  8. Verhoef, Erik & Nijkamp, Peter & Rietveld, Piet, 1996. "Second-Best Congestion Pricing: The Case of an Untolled Alternative," Journal of Urban Economics, Elsevier, vol. 40(3), pages 279-302, November.
  9. Verhoef Erik T., 1997. "Externalities," Serie Research Memoranda 0031, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  10. Levinson, David & Gillen, David & Chang, Elva, 1999. "Assessing the Benefits and Costs of Intelligent Transportation Systems: The Value of Advanced Traveler Information Systems," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt9m8534tc, Institute of Transportation Studies, UC Berkeley.
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  13. Jou, Rong-Chang & Lam, Soi-Hoi & Liu, Yu-Hsin & Chen, Ke-Hong, 2005. "Route switching behavior on freeways with the provision of different types of real-time traffic information," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(5), pages 445-461, June.
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Citations

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Cited by:
  1. Sergejs Gubins & Erik T. Verhoef & Thomas de Graaff, 2010. "Welfare Effects of Road Pricing and Traffic Information under Alternative Ownership Regimes," Tinbergen Institute Discussion Papers 10-091/3, Tinbergen Institute.
  2. Hiroaki Miyoshi, 2006. "Externalities and Taxation/Subsidization Policy of Vehicle Information and Communication System," ERSA conference papers ersa06p239, European Regional Science Association.
  3. Enrique Fernández L., J. & de Cea Ch, Joaquín & Germán Valverde, G., 2009. "Effect of advanced traveler information systems and road pricing in a network with non-recurrent congestion," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(5), pages 481-499, June.
  4. Piet Rietveld, 2010. "The Economics of Information in Transport," Tinbergen Institute Discussion Papers 10-110/3, Tinbergen Institute.
  5. André De Palma & Nathalie Picard, 2005. "Congestion on risky routes with risk adverse drivers," ERSA conference papers ersa05p423, European Regional Science Association.
  6. Szeto, W.Y. & Lo, Hong K., 2008. "Time-dependent transport network improvement and tolling strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(2), pages 376-391, February.
  7. André De Palma & Robin Lindsey & Nathalie Picard, 2008. "Risk aversion, the value of information and traffic equilibrium," Working Papers hal-00349492, HAL.

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