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A monopolistic market for advanced traveller information systems and road use efficiency

  • Zhang, Rong
  • Verhoef, Erik T.

Advanced traveller information systems (ATIS) are likely to exhibit significant economies of scale in production and operation. Private provision would therefore typically occur under considerable market power. An important policy question is whether the resulting distortions would aggravate or reduce distortions in the transport market itself, notably external effects such as congestion. We consider such questions by presenting an integrated model that captures the interactions between a congested transport market and a monopolistic market for advanced traveller information systems (ATIS). Three market failures operate simultaneously: congestion on the road, a declining average benefit of information when information penetration rises, and monopolistic pricing by the provider of information. Some key results are as follows. Monopoly information pricing appears not to be the most attractive option from a system efficiency viewpoint. A subsidy in the information market can help realise a second-best optimum of road use. Relatively low uncertainty on the road and high information costs limit the monopolist's profit on the information market, as well as relative system efficiency. While relatively inelastic demand for mobility, counter intuitively, negatively affects the monopolist's profit, the relative social benefits from private information peak at intermediate demand elasticities.

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Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

Volume (Year): 40 (2006)
Issue (Month): 5 (June)
Pages: 424-443

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Handle: RePEc:eee:transa:v:40:y:2006:i:5:p:424-443
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  1. Al-Deek, Haitham M. & Khattak, Asad J. & Thananjeyan, Paramsothy, 1998. "A combined traveler behavior and system performance model with advanced traveler information systems," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(7), pages 479-493, September.
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  6. Verhoef, Erik & Nijkamp, Peter & Rietveld, Piet, 1996. "Second-Best Congestion Pricing: The Case of an Untolled Alternative," Journal of Urban Economics, Elsevier, vol. 40(3), pages 279-302, November.
  7. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1996. "Information and Usage of Free-Access Congestible Facilities with Stochastic Capacity and Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 181-203, February.
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