Competition in Multi-Modal Transport Networks: A Dynamic Approach
AbstractWe analyse the behaviour of market participants in a multi-modal commuter network where roads are not priced, but public transport has a usage fee, which is set while taking the effects on the roads into account. In particular, we analyse the difference between markets with a monopolistic public transport operator, which operates all public transport links, and markets in which separate operators own each public transport link. To do so, we consider a simple transport network consisting of two serial segments and two parallel congestible modes of transport. We obtain a reduced form of the public transport operator's optimal fare setting problem and show that, even if the total travel demand is inelastic, serial Bertrand-Nash competition on the public transport links leads to different fares than a serial monopoly; a result not observed in a static model. This results from the fact that trip timing decisions, and therefore the generalized prices of all commuters, are influenced by all fares in the network. We then use numerical simulations to show that, contrary to the results obtained in classic studies on vertical competition, monopolistic fares are not always higher than duopolistic fares; the opposite can also occur. We also explore how different parameters influence the price differential, and how this affects welfare.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 12-116/VIII.
Date of creation: 01 Nov 2012
Date of revision:
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Public transport; congestion; market structure; market design;
Other versions of this item:
- van der Weijde, Adriaan Hendrik & Verhoef, Erik T. & van den Berg, Vincent A.C., 2013. "Competition in multi-modal transport networks: A dynamic approach," Transportation Research Part B: Methodological, Elsevier, vol. 53(C), pages 31-44.
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Systems - - - Transportation: Demand, Supply, and Congestion
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Systems - - - Government Pricing and Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
- NEP-COM-2012-11-17 (Industrial Competition)
- NEP-NET-2012-11-17 (Network Economics)
- NEP-TRE-2012-11-17 (Transport Economics)
- NEP-URE-2012-11-17 (Urban & Real Estate Economics)
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