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Market power in transportation: Spatial equilibrium under Bertrand competition

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  • Anderson, Simon P.
  • Wilson, Wesley W.

Abstract

We examine spatial competition along a waterway when shippers are distributed over space. Competition is between barge and rail companies and among barge companies. Equilibrium prices are derived for two variations: oligopolistic rivalry between barge and rail operators, and oligopolistic rivalry among barge operators with terminals located at different points on the waterway. In the first variant, each mode has an advantage over some shippers and transporters׳ overprice cost advantages (price differences are too small in equilibrium). The second variant delivers a “chain-linked” system of markets, whereby cost changes in one market are passed through equilibrium prices to other markets. Barge operators with cost advantages parlay these into market size advantages.

Suggested Citation

  • Anderson, Simon P. & Wilson, Wesley W., 2015. "Market power in transportation: Spatial equilibrium under Bertrand competition," Economics of Transportation, Elsevier, vol. 4(1), pages 7-15.
    • Handle: RePEc:eee:ecotra:v:4:y:2015:i:1:p:7-15
    DOI: 10.1016/j.ecotra.2014.11.002
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    References listed on IDEAS

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    3. Joseph E. Stiglitz & G. Frank Mathewson (ed.), 1986. "New Developments in the Analysis of Market Structure," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690934, December.
    4. Train, Kenneth & Wilson, Wesley W., 2008. "Estimation on stated-preference experiments constructed from revealed-preference choices," Transportation Research Part B: Methodological, Elsevier, vol. 42(3), pages 191-203, March.
    5. Simon P. Anderson & Wesley W. Wilson, 2008. "Spatial Competition, Pricing, And Market Power In Transportation: A Dominant Firm Model," Journal of Regional Science, Wiley Blackwell, vol. 48(2), pages 367-397, May.
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    Cited by:

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    2. Daniele Crotti & Elena Maggi, 2023. "Social Responsibility and Urban Consolidation Centres in Sustainable Freight Transport Markets," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(2), pages 829-850, July.

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