This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Agent-Based Model of Price Competition and Product Differentiation on Congested Networks

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Lei Zhang
David Levinson ()
Shanjiang Zhu (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)

Additional information is available for the following registered author(s):

Abstract

Using consistent agent-based techniques, this research models the decision-making processes of users and infrastructure owner/operators to explore the welfare consequence of price competition, capacity choice, and product differentiation on congested transportation networks. Component models include: (1) An agent-based travel demand model wherein each traveler has learning capabilities and unique characteristics (e.g. value of time); (2) Econometric facility provision cost models; and (3) Representations of road authorities making pricing and capacity decisions. Different from small-network equilibrium models in prior literature, this agent-based model is applicable to pricing and investment analyses on large complex networks. The subsequent economic analysis focuses on the source, evolution, measurement, and impact of product differentiation with heterogeneous users on a mixed ownership network (with tolled and untolled roads). Two types of product differentiation in the presence of toll roads, path differentiation and space differentiation, are defined and measured for a base case and several variants with different types of price and capacity competition and with various degrees of user heterogeneity. The findings favor a fixed-rate road pricing policy compared to complete pricing freedom on toll roads. It is also shown that the relationship between net social benefit and user heterogeneity is not monotonic on a complex network with toll roads.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://nexus.umn.edu/Papers/AgentPriceCompetition.pdf
File Format: application/pdf
File Function: First version, 2007
Download Restriction: no

Publisher Info
Paper provided by University of Minnesota: Nexus Research Group in its series Working Papers with number 200809.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 2007
Date of revision:
Publication status: Published in Journal of Transport Economics and Policy Sept. 2008 42(3) Pages 435-461.
Handle: RePEc:nex:wpaper:agentpricecompetition

Contact details of provider:
Postal: Dept. of Civil Engineering, 500 Pillsbury Drive SE, Minneapolis, MN 55455
Phone: +01 (612) 625-6354
Fax: +01 (612) 626-7750
Web page: http://nexus.umn.edu
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (David Levinson).

Related research
Keywords: Network dynamics; road pricing; autonomous links; privatization; price competition; product differentiation; agent-based transportation model;

Find related papers by JEL classification:
R40 - Urban, Rural, and Regional Economics - - Transportation Systems - - - General
R42 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government and Private Investment Analysis
R48 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government Pricing; Regulatory Policies
D10 - Microeconomics - - Household Behavior - - - General
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Poorzahedy, Hossain & Turnquist, Mark A., 1982. "Approximate algorithms for the discrete network design problem," Transportation Research Part B: Methodological, Elsevier, vol. 16(1), pages 45-55, February. [Downloadable!] (restricted)
  2. Keeler, Theodore E & Small, Kenneth A, 1977. "Optimal Peak-Load Pricing, Investment, and Service Levels on Urban Expressways," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 1-25, February. [Downloadable!] (restricted)
  3. David Levinson & Ramachandra Karamalaputi, 2003. "Induced Supply: A Model of Highway Network Expansion at the Microscopic Level," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 37(3), pages 297-318, September. [Downloadable!] (restricted)
  4. David Levinson, 1999. "Tolling at a Frontier: A Game Theoretic Analysis," Working Papers 199904, University of Minnesota: Nexus Research Group. [Downloadable!]
  5. David Levinson, 2000. "Revenue Choice on a Serial Network," Working Papers 200001, University of Minnesota: Nexus Research Group. [Downloadable!]
  6. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, vol. 83(1), pages 161-79, March. [Downloadable!] (restricted)
  7. Lei Zhang & David Levinson, 2006. "The Economics of Transportation Network Growth," Working Papers 200710, University of Minnesota: Nexus Research Group. [Downloadable!]
  8. Small, Kenneth & Yan, Jia, 2000. "The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation," Discussion Papers dp-00-08, Resources For the Future. [Downloadable!]
    Other versions:
  9. Erik T. Verhoef & Kenneth A. Small, 1999. "Product Differentiation on Roads: Second-Best Congestion Pricing with Heterogeneity under Public and Private Ownership," Tinbergen Institute Discussion Papers 99-066/3, Tinbergen Institute. [Downloadable!]
    Other versions:
  10. Verhoef, Erik T., 2002. "Second-best congestion pricing in general networks. Heuristic algorithms for finding second-best optimal toll levels and toll points," Transportation Research Part B: Methodological, Elsevier, vol. 36(8), pages 707-729, September. [Downloadable!] (restricted)
  11. Liu, Louie Nan & McDonald, John F., 1999. "Economic efficiency of second-best congestion pricing schemes in urban highway systems," Transportation Research Part B: Methodological, Elsevier, vol. 33(3), pages 157-188, April. [Downloadable!] (restricted)
  12. De Borger Bruno & Dunkerley Fay & Proost Stef, 2006. "The interaction between tolls and capacity investment in serial and parallel transport networks," Energy, Transport and Environment Working Papers Series ete0607, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment. [Downloadable!]
    Other versions:
  13. Mokhtarian, Patricia L. & Chen, Cynthia, 2004. "TTB or not TTB, that is the question: a review and analysis of the empirical literature on travel time (and money) budgets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(9-10), pages 643-675. [Downloadable!] (restricted)
  14. David Levinson & Ramachandra Karamalaputi, 2003. "Induced Supply: A Model of Highway Network Expansion at the Microscopic Level," Working Papers 200304, University of Minnesota: Nexus Research Group. [Downloadable!]
  15. Wuping Xin & David Levinson, 2006. "Stochastic congestion and pricing model with endogenous departure time selection and heterogeneous travelers," Working Papers 000029, University of Minnesota: Nexus Research Group. [Downloadable!]
  16. Lei Zhang & David Levinson, 2004. "An Agent-Based Approach to Travel Demand Modeling: An Exploratory Analysis," Working Papers 200405, University of Minnesota: Nexus Research Group. [Downloadable!]
  17. Meng, Q. & Yang, H. & Bell, M. G. H., 2001. "An equivalent continuously differentiable model and a locally convergent algorithm for the continuous network design problem," Transportation Research Part B: Methodological, Elsevier, vol. 35(1), pages 83-105, January. [Downloadable!] (restricted)
  18. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1992. "Route choice with heterogeneous drivers and group-specific congestion costs," Regional Science and Urban Economics, Elsevier, vol. 22(1), pages 71-102, March. [Downloadable!] (restricted)
  19. Erik T. Verhoef, 2000. "Second-Best Congestion Pricing in General Networks - Algorithms for Finding Second-Best Optimal Toll Levels and Toll Points," Tinbergen Institute Discussion Papers 00-084/3, Tinbergen Institute. [Downloadable!]
Full references

Statistics
Access and download statistics

Did you know? You can use IDEAS to provide links to papers and articles in your course syllabus.

This page was last updated on 2009-11-10.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.