Maintenance, service quality and congestion pricing with competing roads
This paper studies maintenance and tolling decisions by two competing private operators of roads that experience depreciation and congestion. Duopoly generally results in higher social costs not only than in the first-best optimum but also the second-best optimum in which roads can be maintained but not tolled. Duopoly as a rule performs best when roads have equal capacities and intrinsic qualities so that market power is balanced. It also performs better when maintenance and tolling decisions are made simultaneously rather than sequentially because firms in the sequential game curtail maintenance in the first stage in order to soften toll competition in the second stage.
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Volume (Year): 41 (2007)
Issue (Month): 5 (June)
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References listed on IDEAS
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- de Palma, Andre & Lindsey, Robin, 2002. "Private roads, competition, and incentives to adopt time-based congestion tolling," Journal of Urban Economics, Elsevier, vol. 52(2), pages 217-241, September.
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- Bruno De Borger & Kurt Van Dender, 2005.
"Prices, capacities and service quality in a congestible Bertrand duopoly,"
ERSA conference papers
ersa05p221, European Regional Science Association.
- De Borger, Bruno & Van Dender, Kurt, 2005. "Prices, capacities and service quality in a congestible Bertrand duopoly," University of California Transportation Center, Working Papers qt1k51437c, University of California Transportation Center.
- 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.
- Newbery, David M, 1988. "Road Damage Externalities and Road User Charges," Econometrica, Econometric Society, vol. 56(2), pages 295-316, March.
- Van Dender, Kurt, 2005. "Duopoly Prices Under Congested Access," University of California Transportation Center, Working Papers qt7xw8c3fn, University of California Transportation Center.
- André DE PALMA & Luc LERUTH, 1989. "Congestion and Game in Capacity: a Duopoly Analysis in the Presence of Network Externalities," Annales d'Economie et de Statistique, ENSAE, issue 15-16, pages 389-407.
- AndrÊ de Palma & Robin Lindsey, 2000. "Private toll roads: Competition under various ownership regimes," The Annals of Regional Science, Springer, vol. 34(1), pages 13-35.
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