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The interactin between tolls and capacity investment in serial and parallel transport networks

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  • Bruno De Borger
  • Fay Dunkerley
  • Stef Proost

Abstract

The purpose of this paper is to compare the interaction between pricing and capacity decisions on simple serial and parallel transport networks. When individual links of the network are operated by different regional or national authorities, toll and capacity competition is likely to result. Moreover, the problem is potentially complicated by the presence of both local and transit demand on each link of the network. We bring together and extend the recent literature on the topic and, using both theory and numerical simulation techniques, provide a careful comparison of toll and capacity interaction on serial and parallel network structures. First, we show that there is more tax exporting in serial transport corridors than on competing parallel road networks. Second, the inability to toll transit has quite dramatic negative welfare effects on parallel networks. On the contrary, in serial transport corridors it may actually be undesirable to allow the tolling of transit at all. Third, if the links are exclusively used by transit transport, toll and capacity decisions are independent in serial networks. This does not generally hold in the presence of local transport. Moreover, it contrasts with a parallel setting where regional authorities compete for transit; in that case, regional investment in capacity leads to lower Nash equilibrium tolls.

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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces0617.

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Date of creation: Mar 2006
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Handle: RePEc:ete:ceswps:ces0617

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Keywords: congestion pricing; transport investment; transit traffic;

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References

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  1. Small, K.A. & Yan, J., 1999. "The Value of "Value Princing" of Roads: Second-Best Pricing and Product Differentiation," Papers 99-00-02, California Irvine - School of Social Sciences.
  2. DE BORGER, Bruno & PROOST, Stef & VAN DENDER, Kurt, 2004. "Congestion and tax competition in a parallel network," CORE Discussion Papers 2004018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. De Borger, Bruno & Van Dender, Kurt, 2005. "Prices, capacities and service quality in a congestible Bertrand duopoly," University of California Transportation Center, Working Papers qt1k51437c, University of California Transportation Center.
  4. Bassanini, Anna & Pouyet, Jerome, 2005. "Strategic choice of financing systems in regulated and interconnected industries," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 233-259, February.
  5. Robin Lindsey & André de Palma, 1997. "Private Toll Roads: A Dynamic Equilibrium Analysis," Tinbergen Institute Discussion Papers 97-057/3, Tinbergen Institute.
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Cited by:
  1. Adriaan Hendrik van der Weijde & Erik T. Verhoef & Vincent van den Berg, 2012. "Competition in Multi-Modal Transport Networks: A Dynamic Approach," Tinbergen Institute Discussion Papers 12-116/VIII, Tinbergen Institute.
  2. Adriaan Hendrik van der Weijde & Erik T. Verhoef & Vincent van den Berg, 2012. "Competition in Multi-Modal Transport Networks: A Dynamic Approach," Tinbergen Institute Discussion Papers 12-116/VIII, Tinbergen Institute.
  3. Proost, Stef & Dunkerley, Fay & Borger, Bruno De & Gühneman, Astrid & Koskenoja, Pia & Mackie, Peter & Loo, Saskia Van der, 2011. "When are subsidies to trans-European network projects justified?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(3), pages 161-170, March.
  4. DE BORGER, Bruno & PROOST, Stef, 2012. "Transport policy competition between governments: A selective survey of the literature," Working Papers 2012014, University of Antwerp, Faculty of Applied Economics.
  5. Lei Zhang & David Levinson & Shanjiang Zhu, 2007. "Agent-Based Model of Price Competition and Product Differentiation on Congested Networks," Working Papers 200809, University of Minnesota: Nexus Research Group.
  6. Westin , Jonas & Basck, Pierre & Franklin, Joel P. & Proost , Stef & Raux , Charles, 2012. "Achieving political acceptability for new transport infrastructure in congested urban regions," Working papers in Transport Economics 2012:19, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

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