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A Monopolistic Market for Advanced Traveller Information Systems and Road Use Efficiency

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  • Rong Zhang

    ()
    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

  • Erik T. Verhoef

    ()
    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

Abstract

This study presents a model for exploring the interactions between a transport market and a monopolistic market for advanced traveller information systems (ATIS). We examine the properties of the information market, and in particular, the relationship between monopoly information pricing and road system efficiency. From model experiments, we find that increasing information penetration will lead to negative external effects for the already informed drivers. Furthermore, monopoly information pricing is not the most attractive option from a system efficiency viewpoint, because of the relatively high price charged by the monopolist. Third, a user or a producer subsidy on the information market can help realise a second-best optimum of road use. Finally, 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 negatively affects the monopolist’s profit, the relative social benefits from private information peak at intermediate demand elasticities.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-014/3.

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Date of creation: 25 Jan 2004
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Handle: RePEc:dgr:uvatin:20040014

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

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Keywords: Traffic congestion; traffic information; monopolistic pricing;

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References

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  1. 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.
  2. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1996. "Information and Usage of Free-Access Congestible Facilities with Stochastic Capacity and Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 181-203, February.
  3. Emmerink, Richard H M, et al, 1998. "Information Effects in Transport with Stochastic Capacity and Uncertainty Costs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 89-110, February.
  4. Yang, Hai & Meng, Qiang, 2001. "Modeling user adoption of advanced traveler information systems: dynamic evolution and stationary equilibrium," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(10), pages 895-912, December.
  5. Richard H. M. Emmerink & Erik T. Verhoef & Peter Nijkamp & Piet Rietveld, 1996. "Endogenising demand for information in road transport," The Annals of Regional Science, Springer, vol. 30(2), pages 201-222.
  6. Verhoef Erik T., 1997. "Externalities," Serie Research Memoranda 0031, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  7. Yang, Hai, 1998. "Multiple equilibrium behaviors and advanced traveler information systems with endogenous market penetration," Transportation Research Part B: Methodological, Elsevier, vol. 32(3), pages 205-218, April.
  8. 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.
  9. 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.
  10. Al-Deek, Haitham M. & Khattak, Asad J. & Thananjeyan, Paramsothy, 1998. "A combined traveler behavior and system performance model with advanced traveler information systems," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(7), pages 479-493, September.
  11. 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.
  12. David Levinson, 2003. "The Value of Advanced Traveler Information Systems for Route Choice," Working Papers 200307, University of Minnesota: Nexus Research Group.
  13. 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.
  14. Emmerink, Richard H. M. & Verhoef, Erik T. & Nijkamp, Peter & Rietveld, Piet, 1997. "Information in road networks with multiple origin-destination pairs," Regional Science and Urban Economics, Elsevier, vol. 27(3), pages 217-240, June.
  15. Richard Arnott, 1989. "Does Providing Information to Drivers Reduce Traffic Congestion?," Discussion Papers 864, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  16. 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.
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Citations

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Cited by:
  1. André De Palma & Robin Lindsey & Nathalie Picard, 2008. "Risk aversion, the value of information and traffic equilibrium," Working Papers hal-00349492, HAL.
  2. Hiroaki Miyoshi, 2006. "Externalities and Taxation/Subsidization Policy of Vehicle Information and Communication System," ERSA conference papers ersa06p239, European Regional Science Association.
  3. Piet Rietveld, 2010. "The Economics of Information in Transport," Tinbergen Institute Discussion Papers 10-110/3, Tinbergen Institute.
  4. Gubins, Sergejs & Verhoef, Erik T. & de Graaff, Thomas, 2012. "Welfare effects of road pricing and traffic information under alternative ownership regimes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1304-1317.
  5. 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.
  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 & Nathalie Picard, 2005. "Congestion on risky routes with risk adverse drivers," ERSA conference papers ersa05p423, European Regional Science Association.

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