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A New Look at the Two-Mode Problem

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  • Marvin Kraus

    ()
    (Boston College)

Abstract

This paper considers the second-best policy problem that arises when auto travel is priced below its marginal cost and there is a substitute mass transit mode. We analyze the problem by combining a model of a rail line based on Kraus and Yoshida (JUE (2002)) with the highway bottleneck model. The model involves a transit authority which optimizes, in addition to the fare, two dimensions of transit capacity. These are (1) the number of train units serving the route and (2) the capacity of an individual train unit. Under a very weak condition, second-best optimality involves expanding both dimensions of transit capacity. The larger of the effects is on train size.

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File URL: http://dx.doi.org/10.1016/S0094-1190(03)00079-2
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Bibliographic Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 551.

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Length: 30 pages
Date of creation: 17 Dec 2002
Date of revision:
Publication status: Published, Journal of Urban Economics, 54:3, 511-530, 2003
Handle: RePEc:boc:bocoec:551

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Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA
Phone: 617-552-3670
Fax: +1-617-552-2308
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Web page: http://fmwww.bc.edu/EC/
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References

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  1. Erik T. Verhoef & Kenneth A. Small, 1999. "Product Differentiation on Roads: Second-Best Congestion Pricing with Heterogeneity under Public and Private Ownership," Tinbergen Institute Discussion Papers 99-066/3, Tinbergen Institute.
  2. Small, Kenneth A., 2001. "The Value of Pricing," University of California Transportation Center, Working Papers qt0rm449sx, University of California Transportation Center.
  3. Small, Kenneth A. & Yan, Jia, 2001. "The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation," Journal of Urban Economics, Elsevier, vol. 49(2), pages 310-336, March.
  4. Braid, Ralph M., 1996. "Peak-Load Pricing of a Transportation Route with an Unpriced Substitute," Journal of Urban Economics, Elsevier, vol. 40(2), pages 179-197, September.
  5. Liu, Louie Nan & McDonald, John F., 1998. "Efficient Congestion Tolls in the Presence of Unpriced Congestion: A Peak and Off-Peak Simulation Model," Journal of Urban Economics, Elsevier, vol. 44(3), pages 352-366, November.
  6. 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.
  7. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1990. "Economics of a bottleneck," Journal of Urban Economics, Elsevier, vol. 27(1), pages 111-130, January.
  8. Liu, Louie Nan & McDonald, John F., 1999. "Economic efficiency of second-best congestion pricing schemes in urban highway systems," Transportation Research Part B: Methodological, Elsevier, vol. 33(3), pages 157-188, April.
  9. AndrÊ de Palma & Robin Lindsey, 2000. "Private toll roads: Competition under various ownership regimes," The Annals of Regional Science, Springer, vol. 34(1), pages 13-35.
  10. Wilson, John D., 1983. "Optimal road capacity in the presence of unpriced congestion," Journal of Urban Economics, Elsevier, vol. 13(3), pages 337-357, May.
  11. Kraus, Marvin & Yoshida, Yuichiro, 2002. "The Commuter's Time-of-Use Decision and Optimal Pricing and Service in Urban Mass Transit," Journal of Urban Economics, Elsevier, vol. 51(1), pages 170-195, January.
  12. Sherman, Roger, 1971. "Congestion Interdependence and Urban Transit Fares," Econometrica, Econometric Society, vol. 39(3), pages 565-76, May.
  13. Richard Arnott & An Yan, 2000. "The Two-Mode Problem: Second-Best Pricing and Capacity," Boston College Working Papers in Economics 474, Boston College Department of Economics.
  14. d'Ouville, Edmond L. & McDonald, John F., 1990. "Optimal road capacity with a suboptimal congestion toll," Journal of Urban Economics, Elsevier, vol. 28(1), pages 34-49, July.
  15. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
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Citations

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Cited by:
  1. Bruno de Borger & Stef Proost, 2004. "Vertical and horizontal tax competition in the transport sector," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(4), pages 45-64.
  2. Luke Haywood & Martin Koning, 2012. "Avoir les coudes serrés dans le métro parisien : évaluation contingente du confort des déplacements," Revue d'économie industrielle, De Boeck Université, vol. 0(4), pages 111-144.
  3. Rapoport, Amnon & Stein, William E. & Mak, Vincent & Zwick, Rami & Seale, Darryl A., 2010. "Endogenous arrivals in batch queues with constant or variable capacity," Transportation Research Part B: Methodological, Elsevier, vol. 44(10), pages 1166-1185, December.
  4. Tian, Qiong & Huang, Hai-Jun & Yang, Hai, 2007. "Equilibrium properties of the morning peak-period commuting in a many-to-one mass transit system," Transportation Research Part B: Methodological, Elsevier, vol. 41(6), pages 616-631, July.
  5. Gonzales, Eric J. & Daganzo, Carlos F., 2012. "Morning commute with competing modes and distributed demand: User equilibrium, system optimum, and pricing," Transportation Research Part B: Methodological, Elsevier, vol. 46(10), pages 1519-1534.
  6. Marvin Kraus, 2011. "Road Pricing with Optimal Mass Transit," Boston College Working Papers in Economics 771, Boston College Department of Economics, revised 15 Apr 2012.
  7. van den Berg, Vincent A.C., 2013. "Serial private infrastructures," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 186-202.
  8. repec:dgr:uvatin:2011059 is not listed on IDEAS
  9. Yang, Hai & Liu, Wei & Wang, Xiaolei & Zhang, Xiaoning, 2013. "On the morning commute problem with bottleneck congestion and parking space constraints," Transportation Research Part B: Methodological, Elsevier, vol. 58(C), pages 106-118.
  10. Kutzbach, Mark J., 2009. "Motorization in developing countries: Causes, consequences, and effectiveness of policy options," Journal of Urban Economics, Elsevier, vol. 65(2), pages 154-166, March.
  11. Yoshida, Yuichiro, 2008. "Commuter arrivals and optimal service in mass transit: Does queuing behavior at transit stops matter?," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 228-251, May.

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