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Impact of congestion charging on the transit market: An inter-modal equilibrium model

Listed author(s):
  • Wichiensin, Muanmas
  • Bell, Michael G.H.
  • Yang, Hai
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An inter-modal equilibrium model links an urban road network subject to a congestion charge to a parallel urban transit market, with a view to finding the optimum congestion charge consistent with the commercial decisions of the transit operator(s). A congestion charge is set to maximise social surplus. Travel behaviour is assumed to conform to elastic-demand user equilibrium traffic assignment. The transit market is assumed to be either a profit maximising monopoly or a profit maximising duopoly competing non-cooperatively. The operator(s) set the fares to maximise profits and the supply of transit services are determined by the resulting demand. The problem has been formulated as a bi-level programme with the determination of the congestion charge on the upper level and the setting of transit fares on the lower level. In the case of non-cooperating operators, the Bertrand-Nash equilibrium fares are sought. The results of the model are analysed for a small example based loosely on Edinburgh. This reveals the importance of competition in the transit market for the trade off between the government, the transit provider(s) and the travellers.

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

Volume (Year): 41 (2007)
Issue (Month): 7 (August)
Pages: 703-713

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Handle: RePEc:eee:transa:v:41:y:2007:i:7:p:703-713
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  1. Joskow, Paul L, 1975. "Firm Decision-making Processes and Oligopoly Theory," American Economic Review, American Economic Association, vol. 65(2), pages 270-279, May.
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  6. Ferrari, Paolo, 1999. "A model of urban transport management," Transportation Research Part B: Methodological, Elsevier, vol. 33(1), pages 43-61, February.
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