IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v40y2006i5p424-443.html
   My bibliography  Save this article

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

Author

Listed:
  • Zhang, Rong
  • Verhoef, Erik T.

Abstract

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.

Suggested Citation

  • Zhang, Rong & Verhoef, Erik T., 2006. "A monopolistic market for advanced traveller information systems and road use efficiency," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(5), pages 424-443, June.
  • Handle: RePEc:eee:transa:v:40:y:2006:i:5:p:424-443
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965-8564(05)00113-8
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard H. M. Emmerink & Erik T. Verhoef & Peter Nijkamp & Piet Rietveld, 1996. "Endogenising demand for information in road transport," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 30(2), pages 201-222.
    2. Jou, Rong-Chang & Lam, Soi-Hoi & Liu, Yu-Hsin & Chen, Ke-Hong, 2005. "Route switching behavior on freeways with the provision of different types of real-time traffic information," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(5), pages 445-461, June.
    3. Yang, Hai & Meng, Qiang, 2001. "Modeling user adoption of advanced traveler information systems: dynamic evolution and stationary equilibrium," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(10), pages 895-912, December.
    4. Emmerink, Richard H M, et al, 1998. "Information Effects in Transport with Stochastic Capacity and Uncertainty Costs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 89-110, February.
    5. Yin, Yafeng & Yang, Hai, 2003. "Simultaneous determination of the equilibrium market penetration and compliance rate of advanced traveler information systems," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(2), pages 165-181, February.
    6. 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.
    7. David Levinson, 2003. "The Value of Advanced Traveler Information Systems for Route Choice," Working Papers 200307, University of Minnesota: Nexus Research Group.
    8. Hai Yang, 1999. "Evaluating the benefits of a combined route guidance and road pricing system in a traffic network with recurrent congestion," Transportation, Springer, vol. 26(3), pages 299-322, August.
    9. 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.
    10. 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.
    11. Yang, Hai, 1998. "Multiple equilibrium behaviors and advanced traveler information systems with endogenous market penetration," Transportation Research Part B: Methodological, Elsevier, vol. 32(3), pages 205-218, April.
    12. Levinson, David & Gillen, David & Chang, Elva, 1999. "Assessing the Benefits and Costs of Intelligent Transportation Systems: The Value of Advanced Traveler Information Systems," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt9m8534tc, Institute of Transportation Studies, UC Berkeley.
    13. Emmerink, Richard H. M. & Verhoef, Erik T. & Nijkamp, Peter & Rietveld, Piet, 1997. "Information in road networks with multiple origin-destination pairs," Regional Science and Urban Economics, Elsevier, vol. 27(3), pages 217-240, June.
    14. Emmerink, Richard H. M. & Verhoef, Erik T. & Nijkamp, Peter & Rietveld, Piet, 1998. "Information policy in road transport with elastic demand: Some welfare economic considerations," European Economic Review, Elsevier, vol. 42(1), pages 71-95, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:dgr:uvatin:20100091 is not listed on IDEAS
    2. Piet Rietveld, 2011. "The Economics of Information in Transport," Chapters,in: A Handbook of Transport Economics, chapter 24 Edward Elgar Publishing.
    3. Szeto, W.Y. & Lo, Hong K., 2008. "Time-dependent transport network improvement and tolling strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(2), pages 376-391, February.
    4. André de Palma & Robin Lindsey & Nathalie Picard, 2012. "Risk Aversion, the Value of Information, and Traffic Equilibrium," Transportation Science, INFORMS, vol. 46(1), pages 1-26, February.
    5. Rouhani, Omid M. & Oliver Gao, H., 2014. "An advanced traveler general information system for Fresno, California," Transportation Research Part A: Policy and Practice, Elsevier, vol. 67(C), pages 254-267.
    6. Gubins, Sergejs & Verhoef, Erik T. & de Graaff, Thomas, 2012. "Welfare effects of road pricing and traffic information under alternative ownership regimes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1304-1317.
    7. Enrique Fernández L., J. & de Cea Ch, Joaquín & Germán Valverde, G., 2009. "Effect of advanced traveler information systems and road pricing in a network with non-recurrent congestion," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(5), pages 481-499, June.

    More about this item

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:40:y:2006:i:5:p:424-443. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.