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Competing Transport Networks

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Author Info
Marco J. van der Leij () (Faculty of Economics, Erasmus University Rotterdam)

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Abstract

In a circular city model, I consider network design and pricing decisions for a single fast transport connection that faces competition from a slower but better accessible transport mode. To access the fast transport network individuals have to make complementary trips by slow mode. This fact has interesting implications on the location decisions. I show that in the presence of competition the profit-maximizing and socially optimal decision would be to cluster the two stations. By contrast, in the absence of competition both a profit-maximizing firm and a social planner would locate the two stations on opposite sides of the circle.

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Publisher Info
Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 03-009/1.

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Date of creation: 23 Jan 2003
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Handle: RePEc:dgr:uvatin:20030009

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Web page: http://www.tinbergen.nl/

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Related research
Keywords: Networks; Transportation; Competition; Market area; Circular city.;

Find related papers by JEL classification:
L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
D40 - Microeconomics - - Market Structure and Pricing - - - General

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References listed on IDEAS
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  1. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring. [Downloadable!] (restricted)
  2. Hendricks, Ken & Piccione, Michele & Tan, Guofu, 1995. "The Economics of Hubs: The Case of Monopoly," Review of Economic Studies, Blackwell Publishing, vol. 62(1), pages 83-99, January. [Downloadable!] (restricted)
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  3. Niérat, Patrick, 1997. "Market area of rail-truck terminals: Pertinence of the spatial theory," Transportation Research Part A: Policy and Practice, Elsevier, vol. 31(2), pages 109-127, March. [Downloadable!] (restricted)
  4. Ken Hendricks & Michele Piccione & Guofu Tan, 1997. "Entry and Exit in Hub-Spoke Networks," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 291-303, Summer. [Downloadable!] (restricted)
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