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Welfare effects of road pricing and traffic information under alternative ownership regimes

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Author Info

  • Gubins, Sergejs
  • Verhoef, Erik T.
  • de Graaff, Thomas

Abstract

This paper models strategic interactions between a road supplier, a provider of traffic information, and road users, with stochastic travel times. Using a game-theoretical analysis of suppliers’ pricing strategies, we assess the social welfare effects of traffic information under various ownership regimes. The results show that the distortive welfare effect of monopolistic information pricing appears relatively small. Collusion of the road operator and information provider yields higher social welfare than independent pricing by two firms. The intuition behind this result resembles that behind the welfare effects of double marginalization, but is not exactly the same, as traffic information is not strictly complementary to road use.

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Bibliographic Info

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

Volume (Year): 46 (2012)
Issue (Month): 8 ()
Pages: 1304-1317

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Handle: RePEc:eee:transa:v:46:y:2012:i:8:p:1304-1317

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Related research

Keywords: Willingness to pay for information; Private road operator; Private information provider; ICT;

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  1. Robin Lindsey & Andre de Palma, 1998. "Information and Usage of Congestible Facilities Under Different Pricing Regimes," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 666-692, August.
  2. Kihlstrom, Richard E, 1974. "A Bayesian Model of Demand for Information About Product Quality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(1), pages 99-118, February.
  3. Salop, Steven, 1977. "The Noisy Monopolist: Imperfect Information, Price Dispersion and Price Discrimination," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 393-406, October.
  4. Gerard de Jong & Hugh Gunn, 2001. "Recent Evidence on Car Cost and Time Elasticities of Travel Demand in Europe," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 35(2), pages 137-160, May.
  5. Verhoef, Erik T. & Emmerink, Richard H. M. & Nijkamp, Peter & Rietveld, Piet, 1996. "Information provision, flat and fine congestion tolling and the efficiency of road usage," Regional Science and Urban Economics, Elsevier, vol. 26(5), pages 505-529, August.
  6. Hai Yang, 1999. "Evaluating the benefits of a combined route guidance and road pricing system in a traffic network with recurrent congestion," Transportation, Springer, vol. 26(3), pages 299-322, August.
  7. Joseph E. Stiglitz, 2000. "The Contributions Of The Economics Of Information To Twentieth Century Economics," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1441-1478, November.
  8. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213.
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