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Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services

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  • Batarce, Marco
  • Ivaldi, Marc
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    Abstract

    We formulate and estimate a structural model for travel demand, in which users have hetero- geneous preferences and make their transport decisions considering the network congestion. A key component in the model is that users have incomplete information about the preferences of other users in the network and they behave strategically when they make transportation decisions (mode and number of trips). Therefore, the congestion level is endogenously determinate in the equilibrium of the game played by users. For the estimation, we use the first order conditions of the users' utility maximization problem to derive the likelihood function and apply Bayesian methods for inference. Using data from Santiago, Chile, the estimated demand elasticities are consistent with results reported in the literature and the parameters confirm the effect of the congestion on the individuals' preferences. Finally, we compute optimal nonlinear prices for buses in Santiago, Chile. As a result, the nonlinear pricing schedule produces total benefits slightly greater than the linear pricing. Also, nonlinear pricing implies fewer individuals making trips by bus, but a higher number of trips per individual.

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    Bibliographic Info

    Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 659.

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    Date of creation: May 2010
    Date of revision: Apr 2011
    Handle: RePEc:ide:wpaper:24154

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    1. De Borger B., 2000. "Discrete choice models and optimal two-part tariffs in the presence of externalities: optimal taxation of cars," Working Papers 2000021, University of Antwerp, Faculty of Applied Economics.
    2. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
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    Cited by:
    1. Quentin David & Renaud Foucart, 2012. "Modal choice and optimal congestion," CREA Discussion Paper Series 12-03, Center for Research in Economic Analysis, University of Luxembourg.

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